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American Economic Review: Vol. 101 No. 4 (June 2011)
AER Volume. 101, Issue 4 | 
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AER Forthcoming Articles
The Role of Trading Frictions in Real Asset Markets
Article Citation
Gavazza, Alessandro. 2011. "The Role of Trading Frictions in Real Asset Markets."
American Economic Review,
101(4): 1106-43.
DOI: 10.1257/aer.101.4.1106
DOI: 10.1257/aer.101.4.1106
Abstract
This paper investigates how trading frictions vary with the thickness
of the asset market by examining patterns of asset allocations and
prices in commercial aircraft markets. The empirical analysis indicates
that assets with a thinner market are less liquid — i.e., more
difficult to sell. Thus, firms hold on longer to them amid profitability
shocks. Hence, when markets for assets are thin, firms' average
productivity and capacity utilization are lower, and the dispersions
of productivity and of capacity utilization are higher. In turn, prices
of assets with a thin market are lower and have a higher dispersion.
(JEL A12, L11, L93)
Article Full-Text Access
Full-text Article
Additional Materials
Download Data Set (27.13 MB) | Online Appendix (137.08 KB)
Authors
Gavazza, Alessandro (NYU)
JEL Classifications
A12: Relation of Economics to Other Disciplines
L11: Production, Pricing, and Market Structure; Size Distribution of Firms
L93: Air Transportation
L11: Production, Pricing, and Market Structure; Size Distribution of Firms
L93: Air Transportation
