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Lumpy Consumer Durables, Market Power, and Endogenous Business Cycles

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  • Kala Krishna
  • Cemile Yavas

Abstract

This paper examines the role of lumpy consumer durables and market power in generating endogenous cycles which seem to be consistent with the facts. When goods are durable, past consumption choices determine the current market size which consists of consumers who have not purchased the good previously, and who have the income to make their potential demand effective. Larger past sales, ceteris paribus, thus naturally result in a smaller current market size and income. In this manner, the seeds of a downturn are sown in an upturn.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 8296.

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Date of creation: May 2001
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Publication status: published as Krishna, Kala and Cemile Yavas. "Lumpy Consumer Durables, Market Power, And Endogenous Business Cycles," Canadian Journal of Economics, 2004, v37(2,May), 375-391.
Handle: RePEc:nbr:nberwo:8296

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  17. Stokey, Nancy L, 1979. "Intertemporal Price Discrimination," The Quarterly Journal of Economics, MIT Press, vol. 93(3), pages 355-71, August.
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Cited by:
  1. Kala Krishna & Cemile Yavas, 2002. "When Does Trade Hurt? Market, Transition and Developing Economies," NBER Working Papers 8995, National Bureau of Economic Research, Inc.

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