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A Quantitative Analysis of the Used Car Market

Nikita Roketskiy (), Alessandro Lizzeri and Alessandro Gavazza

No 173, 2012 Meeting Papers from Society for Economic Dynamics

Abstract: We quantitatively investigate the allocative and welfare effects of secondary markets for cars. Gains from trade in these markets arise because of heterogeneity in the willingness to pay for higher-quality (i.e., newer) goods, but transaction costs are an impediment to instantaneous trade. We explore how the income distribution affects this heterogeneity---income is an important determinant of willingness to pay for quality. Calibration of the model matches several aggregate features of U.S. and French used-car markets well. Counterfactual analyses show that transaction costs have a large effect on volume of trade, allocations, and the primary market, but small effects on consumer surplus and welfare.

Date: 2012
New Economics Papers: this item is included in nep-ind and nep-tre
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https://economicdynamics.org/meetpapers/2012/paper_173.pdf (application/pdf)

Related works:
Journal Article: A Quantitative Analysis of the Used-Car Market (2014) Downloads
Working Paper: A quantitative analysis of the used-car market (2014) Downloads
Working Paper: A quantitative analysis of the used-car market (2012) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:red:sed012:173

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