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Leasing and Secondary Markets: Theory and Evidence from Commercial Aircraft
Social Science Research Network
I construct a dynamic model of transactions in used capital to understand the role of leasing when trading is subject to frictions. Firms trade assets to adjust their productive capacity in response to shocks to profitability. Transaction costs hinder the efficiency of the allocation of capital, and lessors act as trading intermediaries who reduce trading frictions. The model predicts that leased assets trade more frequently and produce more output than owned assets, for two reasons. First,doi:10.2139/ssrn.869227 fatcat:tbd67o5r75etvigf4in2hzn62q