Equilibrium in a durable goods market with lumpy adjustment

Andrew Caplin, John Leahy

    Research output: Contribution to journalArticle

    Abstract

    Durable goods are an important component of the business cycle. Equilibrium models of durable goods markets are made difficult by the lumpy nature of individual purchases. We show that a straightforward approximation of the distribution of durable goods holdings gives rise to a tractable equilibrium model. We analyze the case of competition as well as that of a monopoly producer.

    Original languageEnglish (US)
    Pages (from-to)187-213
    Number of pages27
    JournalJournal of Economic Theory
    Volume128
    Issue number1
    DOIs
    StatePublished - May 2006

    Keywords

    • Durable goods
    • Equilibrium
    • S,s policies

    ASJC Scopus subject areas

    • Economics and Econometrics

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