Existence of Stationary Equilibrium in the Markets for New and Used Durable Goods

Hideo Konishi and Michael Sandfort
Additional contact information
Michael Sandfort: Southern Methodist University

No 450, Boston College Working Papers in Economics from Boston College Department of Economics

Abstract: We prove the existence of stationary equilibrium in the primary and secondhand markets for an indivisible consumer durable in a general model with stochastic degradation and endogenous scrappage decisions. Unlike Rust (1985), we introduce transaction costs in the model as a motivation for consumer holdings of durables across multiple quality levels. In addition, we allow for multiple types of durables (e.g., Porsche and BMW). Since we use a fixed point theorem in making the existence argument, we do not need to invoke the single-crossing property on consumer tastes.

Keywords: Durable goods; Transaction costs; Existence of stationary equilibrium (search for similar items in EconPapers)
JEL-codes: C62 D11 D41 (search for similar items in EconPapers)
Pages: 20 pages
Date: 2000-01-20
New Economics Papers: this item is included in nep-mic
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Citations: View citations in EconPapers (1)

Published, Journal of Economic Dynamics and Control, 26, 1029-1052

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Related works:
Journal Article: Existence of stationary equilibrium in the markets for new and used durable goods (2002)
Working Paper: Existence of Stationary Equilibrium in the Markets for New and Used Durable Goods (2000)
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Persistent link: https://EconPapers.repec.org/RePEc:boc:bocoec:450

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