Equilibrium in Used Car Market with Rental Capital: Evidence from the Nigerian Market
Journal Title: IOSR journal of Business and Management - Year 2018, Vol 20, Issue 2
Abstract
At the point of equilibrium in a used car market, buyers and sellers maximize their utility when the rate of depreciation on the car equalizes the prevailing rental cost of capital. In the main, buyers and sellers rarely agree on the valuation of the two factors. While buyers attached greater weight to depreciation, sellers were more interested in recouping the value of the residual cost of the car. The study solved a bilateral contracting model to explain the motivation behind seller-buyer equilibrium in a used car market. A sale is said to be in equilibrium when the buyer’s price is at least equal to the monetary value of the utility the seller derives from the car. The finding is believed will aid a good understanding of the used car market and provide important insights for making competitive automobile policy.
Authors and Affiliations
Dr. C. Chris Ofonyelu
Keywords
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- EP ID EP409599
- DOI 10.9790/487X-2002016468.
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