Gavazza, Alessandro, Lizzeri, Alessandro and Roketskiy, Nikita (2014) A quantitative analysis of the used-car market. American Economic Review, 104 (11). pp. 3668-3700. ISSN 0002-8282
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Abstract
We quantitatively investigate the allocative and welfare effects of secondary markets for cars. An important source of gains from trade in these markets is the heterogeneity in the willingness to pay for higher-quality (newer) goods, but transaction costs are an impediment to instantaneous trade. Calibration of the model successfully matches several aggregate features of the U.S. and French used-car markets. Counterfactual analyses show that transaction costs have a large effect on volume of trade, allocations, and the primary market. Aggregate effects on consumer surplus and welfare are relatively small, but the effect on lower-valuation households can be large.
| Item Type: | Article |
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| Official URL: | https://www.aeaweb.org/aer/index.php |
| Additional Information: | © 2014 American Economic Association |
| Library of Congress subject classification: | H Social Sciences > HC Economic History and Conditions H Social Sciences > HE Transportation and Communications H Social Sciences > HF Commerce |
| Sets: | Departments > Economics |
| Date Deposited: | 18 Feb 2014 15:45 |
| URL: | http://eprints.lse.ac.uk/55720/ |
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