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An empirical equilibrium model of a decentralized asset market

Gavazza, Alessandro (2012) An empirical equilibrium model of a decentralized asset market. Working papers series. Social Sciences Research Network.

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Abstract

I estimate a search-and-bargaining model of a decentralized market to quantify the effects of trading frictions on asset allocations and asset prices, and to quantify the effects of intermediaries that facilitate trade. Using business-aircraft data, I find that, relative to the Walrasian benchmark, 20.3 percent of the assets are misallocated, and prices are 6.61-percent lower. Dealers play an important role in reducing frictions: In a market with no dealers, 32.3 percent of the assets would be misallocated, and prices would decrease by 5.25 percent.

Item Type: Monograph (Working Paper)
Official URL: http://www.ssrn.com/en/
Additional Information: © 2012 The Author
Divisions: Economics
Subjects: H Social Sciences > HB Economic Theory
H Social Sciences > HD Industries. Land use. Labor
H Social Sciences > HF Commerce
Sets: Departments > Economics
Date Deposited: 18 Feb 2014 16:39
Last Modified: 01 Aug 2020 23:07
URI: http://eprints.lse.ac.uk/id/eprint/55727

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