Open Access. Powered by Scholars. Published by Universities.®
Articles 1 - 3 of 3
Full-Text Articles in Industrial Organization
The Role And Growth Of New-Car Leasing: Theory And Evidence, Justin Johnson, Henry S. Schneider, Michael Waldman
The Role And Growth Of New-Car Leasing: Theory And Evidence, Justin Johnson, Henry S. Schneider, Michael Waldman
Henry S Schneider
An important change in the automobile market over the last few decades has been the substantial growth in new-car leasing. Building on recent theoretical research, we construct a model of the leasing decision in which leasing mitigates adverse selection and reduces transaction costs, but moral hazard limits its use. Also, in our model the prevalence of leasing is related to new-car reliability, so it suggests that the growth in leasing over time is at least partly due to improvements over time in new-car reliability. We use this model to derive a number of testable implications and then conduct an empirical …
Adverse Selection In The Used-Car Market: Evidence From Purchase And Repair Patterns In The Consumer Expenditure Survey, Jonathan Peterson, Henry S. Schneider
Adverse Selection In The Used-Car Market: Evidence From Purchase And Repair Patterns In The Consumer Expenditure Survey, Jonathan Peterson, Henry S. Schneider
Henry S Schneider
We analyze adverse selection in the used-car market using a new approach that considers a car as an assemblage of parts, some with symmetric information and others with asymmetric information. Using data from the Consumer Expenditure Survey and Consumer Reports, we examine both turnover and repair patterns. We find evidence of adverse selection due to the conditions of the transmission, engine, and, during colder months, air conditioning; and sorting due to the conditions of the vehicle body and, during warmer months, air conditioning. Our quantification exercises indicate that adverse selection may have a meaningful effect on trade volume and quality …
Search Costs And Equilibrium Price Dispersion In Auctions, Joseph U. Podwol, Henry S. Schneider, Matthew R. Backus
Search Costs And Equilibrium Price Dispersion In Auctions, Joseph U. Podwol, Henry S. Schneider, Matthew R. Backus
Henry S Schneider
A leading explanation for price dispersion in posted-price markets is search costs. We incorporate this insight into a model of competing second-price auctions similar to eBay. By doing so, we extend the narrow literature on competing auctions to capture price dispersion, and grow the already large literature on price dispersion to include auctions. We provide evidence on search costs and price dispersion using data collected from eBay, identifying search costs by exploiting a discontinuity in the visibility of auctions due to eBay’s search tool.