Existence of Stationary Equilibrium in the Markets for New and Used Durable Goods
We prove the existence of stationary equilibrium in the primary and secondhand markets for an indivisible consumer durable in a general model with stochastic degradation and endogenous scrappage decisions. Unlike Rust (1985), we introduce transaction costs in the model as a motivation for consumer holdings of durables across multiple quality levels. In addition, we allow for multiple types of durables (e.g., Porsche and BMW). Since we use a fixed point theorem in making the existence argument, we do not need to invoke the single-crossing property on consumer tastes.
|Date of creation:||20 Jan 2000|
|Date of revision:|
|Publication status:||published, Journal of Economic Dynamics and Control, 26, 1029-1052|
|Contact details of provider:|| Postal: Boston College, 140 Commonwealth Avenue, Chestnut Hill MA 02467 USA|
Web page: http://fmwww.bc.edu/EC/
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Berry, Steven & Levinsohn, James & Pakes, Ariel, 1995. "Automobile Prices in Market Equilibrium," Econometrica, Econometric Society, vol. 63(4), pages 841-90, July.
- Bresnahan, Timothy F., 1981. "Departures from marginal-cost pricing in the American automobile industry : Estimates for 1977-1978," Journal of Econometrics, Elsevier, vol. 17(2), pages 201-227, November.
- Manski, Charles F., 1983. "Analysis of equilibrium automobile holdings in Israel with aggregate discrete choice models," Transportation Research Part B: Methodological, Elsevier, vol. 17(5), pages 373-389, October.
- HART, Sergiu & HILDENBRAND, Werner & KOHLBERG, Elon, .
"On equilibrium allocations as distributions on the commodity space,"
CORE Discussion Papers RP
183, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Hart, Sergiu & Hildenbrand, Werner & Kohlberg, Elon, 1974. "On equilibrium allocations as distributions on the commodity space," Journal of Mathematical Economics, Elsevier, vol. 1(2), pages 159-166, August.
- Judd, Kenneth L., 1985. "The law of large numbers with a continuum of IID random variables," Journal of Economic Theory, Elsevier, vol. 35(1), pages 19-25, February.
- Anderson, Simon P. & Ginsburgh, Victor A., 1994.
"Price discrimination via second-hand markets,"
European Economic Review,
Elsevier, vol. 38(1), pages 23-44, January.
- Simon P. Anderson & Victor Ginsburgh, 1994. "Price discrimination via second-hand markets," ULB Institutional Repository 2013/1719, ULB -- Universite Libre de Bruxelles.
- ANDERSON, Simon P. & GINSBURGH, Victor A., . "Price discrimination via second-hand markets," CORE Discussion Papers RP 1078, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Igal Hendel & Alessandro Lizzeri, 1997.
"Adverse Selection in Durable Goods Markets,"
NBER Working Papers
6194, National Bureau of Economic Research, Inc.
- Mas-Colell, Andreu, 1975. "A model of equilibrium with differentiated commodities," Journal of Mathematical Economics, Elsevier, vol. 2(2), pages 263-295.
- Rust, John, 1985. "Stationary Equilibrium in a Market for Durable Assets," Econometrica, Econometric Society, vol. 53(4), pages 783-805, July.
- James Berkovec, 1985. "New Car Sales and Used Car Stocks: A Model of the Automobile Market," RAND Journal of Economics, The RAND Corporation, vol. 16(2), pages 195-214, Summer.
- Igal Hendel & Alessandro Lizzeri, 1999. "Interfering with Secondary Markets," RAND Journal of Economics, The RAND Corporation, vol. 30(1), pages 1-21, Spring.
- Bond, Eric W, 1983. "Trade in Used Equipment with Heterogeneous Firms," Journal of Political Economy, University of Chicago Press, vol. 91(4), pages 688-705, August.
- Mas-Colell, Andreu, 1984. "On a theorem of Schmeidler," Journal of Mathematical Economics, Elsevier, vol. 13(3), pages 201-206, December.
- Liebowitz, S J, 1982. "Durability, Market Structure, and New-Used Goods Models," American Economic Review, American Economic Association, vol. 72(4), pages 816-24, September.
- Jovanovic, Boyan & Rosenthal, Robert W., 1986.
"Anonymous Sequential Games,"
86-12, C.V. Starr Center for Applied Economics, New York University.
When requesting a correction, please mention this item's handle: RePEc:boc:bocoec:450. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Christopher F Baum)
If references are entirely missing, you can add them using this form.