Dealer Pricing of Consumer Credit

Giuseppe Bertola, Stefan Hochguertel () and Winfried Koeniger

No 24, Royal Economic Society Annual Conference 2002 from Royal Economic Society

Abstract: Interest rates on consumer lending are lower when funds are tied to purchase of a durable good than when they are made available on an unconditional basis. Further, dealers often choose to bear the financial cost of their customers' credit purchases. This paper interprets this phenomenon in terms of monopolistic price discrimination. We characterize consumers' intertemporal consumption decisions and the dealer's pricing incentives when the consumers' unconditional lending and borrowing rate as well as the internal rate of return of the durable purchase differ. Our empirical analysis offers considerable support for the assumptions and implications of our theoretical perspective.

Date: 2002-08-29
References: Add references at CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://repec.org/res2002/Bertola.pdf full text

Related works:
Journal Article: DEALER PRICING OF CONSUMER CREDIT * (2005)
Working Paper: Dealer Pricing of Consumer Credit (2002)
Working Paper: Dealer Pricing of Consumer Credit (2002)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ecj:ac2002:24

Access Statistics for this paper

More papers in Royal Economic Society Annual Conference 2002 from Royal Economic Society Contact information at EDIRC.
Bibliographic data for series maintained by Christopher F. Baum ().