Leasing and Secondary Markets: Theory and Evidence from Commercial Aircraft
Alessandro Gavazza
Journal of Political Economy
Vol. 119, No. 2 (April 2011), pp. 325-377
Published by: The University of Chicago Press
DOI: 10.1086/660730
Stable URL: http://www.jstor.org/stable/10.1086/660730
Page Count: 53
- Item Type
- Article
- Thumbnails
- References
Abstract
I develop a model of costly capital reallocation to understand how leasing reduces trading frictions. Leased assets trade more frequently and produce more output than owned assets because (1) high-volatility firms are more likely to lease than low-volatility firms and (2) firms shed leased asssets faster than owned assets amid productivity shocks because of lower transaction costs. Commercial aircraft data show that leased aircraft have holding durations 38 percent shorter and fly 6.5 percent more hours than owned aircraft. These differences arise primarily because when profitability declines, carriers keep owned aircraft and return leased aircraft, which lessors redeploy to more productive operators.
Page Thumbnails
-
1
-
2
-
3
-
4
-
5
-
6
-
7
-
8
-
9
-
10
-
11
-
12
-
13
-
14
-
15
-
16
-
17
-
18
-
19
-
20
-
21
-
22
-
23
-
24
-
25
-
26
-
27
-
28
-
29
-
30
-
31
-
32
-
33
-
34
-
35
-
36
-
37
-
38
-
39
-
40
-
41
-
42
-
43
-
44
-
45
-
46
-
47
-
48
-
49
-
50
-
51
-
52
-
53
© 2011 by The University of Chicago. All rights reserved.
Access
You are not currently logged in.
Access your personal account or get JSTOR access through your library or other institution: