Abstract

http://ssrn.com/abstract=2101707
 
 

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Dynamic Interaction between Markets for Leasing and Selling Automobiles


Thanos Andrikopoulos


Athens University of Economics and Business

Raphael N. Markellos


University of East Anglia (UEA) - Norwich Business School

July 6, 2012


Abstract:     
We develop a model of dynamic interactions between price variations in leasing and selling markets for automobiles. Our framework assumes a differential game between multiple Bertrand-type competing firms which offer differentiated products to forward-looking agents. Empirical analysis of our model using monthly US data from 2002 to 2011 shows that variations in selling (cash) market prices lead rapidly dissipating changes of leasing market prices in the opposite direction. We discuss the practical implications of these results by augmenting a standard leasing valuation formula. The additional terms represent the leased asset value changes that can be expected on the basis of past variations in automobile selling market prices.

Number of Pages in PDF File: 24

Keywords: Interacting markets, Automobiles, Differential Games, Leasing, Valuation

JEL Classification: D43, L62, E32, C73

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Date posted: July 8, 2012  

Suggested Citation

Andrikopoulos, Thanos and Markellos, Raphael N., Dynamic Interaction between Markets for Leasing and Selling Automobiles (July 6, 2012). Available at SSRN: http://ssrn.com/abstract=2101707 or http://dx.doi.org/10.2139/ssrn.2101707

Contact Information

Thanos Andrikopoulos
Athens University of Economics and Business ( email )
76 Patission Street
Athens, 104 34
Greece
Raphael N. Markellos (Contact Author)
University of East Anglia (UEA) - Norwich Business School ( email )
Norwich
NR4 7TJ
United Kingdom
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