Endogenous Rigidities and Capital Misallocation: Evidence from Containerships

Maria Garcia-Osipenko, Nicholas Vreugdenhil and Nahim Bin Zahur

No 35821, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We investigate how endogenous rigidities inhibit physical capital reallocation. We focus on the role of contract duration - a classic example of an adjustment rigidity. We argue that when agents sign longer contracts in booms when markets are thin, they generate a contracting externality which further amplifies thinness and impedes the adjustment of markets to shocks. We develop a dynamic spatial framework with booms and busts where agents search and choose match duration. Applying the framework to the containership leasing market, we find substantial misallocation from endogenous rigidities, particularly in the transition after a crash.

JEL-codes: D22 D23 L14 L22 L91 R40 (search for similar items in EconPapers)
Date: 2026-09
New Economics Papers: this item is included in nep-bec and nep-min
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Working Paper: Endogenous Rigidities and Capital Misallocation: Evidence from Containerships (2025)
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