Endogenous Rigidities and Capital Misallocation: Evidence from Containerships

Nahim Bin Zahur, Maria Garcia-Osipenko and Nicholas Vreugdenhil
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Maria Garcia-Osipenko: https://www.dallasfed.org/people/research/economists/garcia-osipenko

No 2636, Working Papers from Federal Reserve Bank of Dallas

Abstract: CORRECT ORDER OF AUTHORS: Garcia-Osipenko, Vreugdenhil, Bin Zahur. 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.

Keywords: capital misallocation; contract duration; contracting externalities; container shipping; search frictions (search for similar items in EconPapers)
JEL-codes: D22 D23 L14 L22 L91 R40 (search for similar items in EconPapers)
Pages: 102 pages
Date: 2026-10-30
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Related works:
Working Paper: Endogenous Rigidities and Capital Misallocation: Evidence from Containerships (2026)
Working Paper: Endogenous Rigidities and Capital Misallocation: Evidence from Containerships (2025)
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Persistent link: https://EconPapers.repec.org/RePEc:fip:feddwp:104007

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DOI: 10.24149/wp2636

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