Credit constraints, consumer leasing and the automobile replacement decision
This paper presents a model of consumer automobile replacement in the presence of leasing. The model incorporates credit constraints to distinguish between the leasing and purchasing options. It demonstrates how leasing increases the probability that a household replaces its automobile and how households that lease choose higher quality automobiles. The qualitative choice model of the household's decision to lease provides support for the observation that households that lease face credit constraints. It also shows that although households that lease new automobiles are quite similar to those that purchase, they exhibit differences consistent with the theory. In particular, they prefer newer, more expensive automobiles.
|Date of creation:||1999|
|Contact details of provider:|| Postal: 20th Street and Constitution Avenue, NW, Washington, DC 20551|
Web page: http://www.federalreserve.gov/
More information through EDIRC
|Order Information:||Web: http://www.federalreserve.gov/pubs/feds/fedsorder.html|
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.:
- Mannering, Fred L. & Train, Kenneth, 1985. "Recent directions in automobile demand modeling," Transportation Research Part B: Methodological, Elsevier, vol. 19(4), pages 265-274, August.
- Kenneth Train, 1985. "Qualitative Choice Analysis: Theory, Econometrics, and an Application to Automobile Demand," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200554, December.
- Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716, December.
- Mannering, Fred & Winston, Clifford & Starkey, William, 2002. "An exploratory analysis of automobile leasing by US households," Journal of Urban Economics, Elsevier, vol. 52(1), pages 154-176, July.
- J L Horowitz, 1987. "Specification Tests for Nested Logit Models," Environment and Planning A, SAGE Publishing, vol. 19(3), pages 395-402, March.
- Goldberg, Pinelopi Koujianou, 1995. "Product Differentiation and Oligopoly in International Markets: The Case of the U.S. Automobile Industry," Econometrica, Econometric Society, vol. 63(4), pages 891-951, July.
- Daniel McFadden, 1977. "Modelling the Choice of Residential Location," Cowles Foundation Discussion Papers 477, Cowles Foundation for Research in Economics, Yale University.
- Hensher, David A, 1986. "Sequential and Full Information Maximum Likelihood Estimation of a Nested Logit Model," The Review of Economics and Statistics, MIT Press, vol. 68(4), pages 657-667, November.
- Ana M. Aizcorbe & Martha Starr-McCluer, 1996. "Vehicle ownership, vehicle acquisitions and the growth of auto leasing: evidence from consumer surveys," Finance and Economics Discussion Series 96-35, Board of Governors of the Federal Reserve System (U.S.).
- Bar-Ilan, Avner & Blinder, Alan S, 1992. "Consumer Durables: Evidence on the Optimality of Usually Doing Nothing," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 24(2), pages 258-272, May.
When requesting a correction, please mention this item's handle: RePEc:fip:fedgfe:1999-68. 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: (Franz Osorio)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.