Cornell University

Joint Industrial Organization & S. C. Tsiang Macroeconomics Workshop: Alessandro Gavazza

Thursday, April 12, 2018 at 11:40am to 1:10pm

Uris Hall, 498

Alessandro Gavazza - London School of Economics

Regulatory Intervention in Consumer Search Market: The Case of Credit Cards

Abstract:  Data on U.S. credit card markets display a large dispersion of interest rates at which consumers borrow. To understand this dispersion, we build a search model with two additional features: search effort/inattention and product differentiation. We calibrate the model to match statistics on the interest rate distribution that borrowers pay. The model fits these data reasonably well. Our analysis implies that low search effort accounts for almost all the dispersion in interest rates, whereas product differentiation is negligible. We use the calibrated model to study regulatory interventions in credit markets, such as caps on interest rates and higher entry costs for lenders.

Event Type

Class/ Workshop

Departments

Economics

Tags

economics, EconIO, EconSeminar, EconMacro

Hashtag

#CornellEcon

Contact E-Mail

alg5@cornell.edu

Contact Name

Amy Moesch

Contact Phone

607-255-5617

Speaker

Alessandro Gavazza

Speaker Affiliation

London School of Economics

Open To

Cornell Economics Community (List Serve Members)

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