We quantitatively investigate the allocative and welfare effects of secondary markets for cars. An important source of gains from trade in these markets is the heterogeneity in the willingness to pay for higher-quality (newer) goods, but transaction costs are an impediment to instantaneous trade. Calibration of the model successfully matches several aggregate features of the U.S. and French used-car markets. Counterfactual analyses show that transaction costs have a large effect on volume of trade, allocations, and the primary market. Aggregate effects on consumer surplus and welfare are relatively small, but the effect on lower-valuation households can be large. * We are grateful to Chad Syverson, four anonymous referees and the editor, and many seminar audiences for insightful comments, and to Alistair Wilson for excellent research assistance. NSF support is gratefully acknowledged. The authors acknowledge the use of the UCL Legion High Performance Computing Facility (Legion@UCL), and associated support services, in the completion of this work.

We quantitatively investigate the allocative and welfare effects of secondary markets for cars. An important source of gains from trade in these markets is the heterogeneity in the willingness to pay for higher-quality (newer) goods, but transaction costs are an impediment to instantaneous trade. Calibration of the model successfully matches several aggregate features of the U.S. and French used-car markets. Counterfactual analyses show that transaction costs have a large effect on volume of trade, allocations, and the primary market. Aggregate effects on consumer surplus and welfare are relatively small, but the effect on lower-valuation households can be large. * We are grateful to Chad Syverson, four anonymous referees and the editor, and many seminar audiences for insightful comments, and to Alistair Wilson for excellent research assistance. NSF support is gratefully acknowledged. The authors acknowledge the use of the UCL Legion High Performance Computing Facility (Legion@UCL), and associated support services, in the completion of this work.

N onlinear pricing is prevalent in many markets, from phone and electricity tariffs to supermarkets items. There is an extensive literature that studies nonlinear pricing as a tool for surplus extraction, often as a device for price discrimination in the context of heterogeneous buyers (see Wilson 1997). However, the contrast with linear pricing is particularly stark when consumers are homogeneous. In this case, the optimal nonlinear pricing policy involves a monopolist selling the socially optimal quantity and extracting all the surplus.Many of the products sold through nonlinear prices are storable. For example, the typical scanner data show quantity discounts in a variety of products ranging from yogurt to detergent (see Hendel and Nevo 2006a,b). Many other products, like intermediate goods, are also storable and priced nonlinearly. We say a good is storable if consumers can set aside units for later consumption. Product storability enables consumers to detach the timing of purchase from the timing of consumption. Storability has distinct implications from those well-studied in the durable good literature. While durable good purchases can also be timed, the literature on durable goods monopoly focuses on the case where consumers have unit demands. 1The goal of the present paper is to study how consumers' ability to store a product may affect sellers' abilities to extract surplus via nonlinear prices. For this purpose, it is important to allow consumers to demand multiple units. 1 The central result in this literature is the Coase conjecture: if the discount factor is high, the equilibrium involves nearly efficient trading at prices close to the marginal cost. See (Waldman 2003) for a survey.* Hendel: Department of Economics, Northwestern University, 2001 Sheridan Road, Evanston, IL 60208 (e-mail: igal@northwestern.edu); Lizzeri: Department of Economics, New York University, 19 West 4th Street, New York, NY 10012 (e-mail: alessandro.lizzeri@nyu.edu); Roketskiy: Department of Economics, University College London, 30 Gordon Street, London, WC1H 0AY, UK (e-mail: n.roketskiy@ucl.ac.uk). We thank Aviv Nevo and Simon Board for helpful comments and an anonymous referee for a thoughtful report. We acknowledge financial support from NSF Grants SES-1130382 (Hendel) and SES-1123227 (Lizzeri).

I develop a model of collaboration between tournament participants in which agents collaborate in pairs, and an endogenous structure of collaboration is represented by a weighted network. The agents are forward-looking and capable of coordination; they value collaboration with others and higher tournament rankings. I use von Neumann-Morgenstern stable sets as a solution. I find stable networks in which agents collaborate only within exclusive groups. Both an absence of intergroup collaboration and excessive intragroup collaboration lead to inefficiency. I provide a necessary and sufficient condition for the stability of efficient outcomes in winner-takes-all tournaments. I show that the use of transfers does not repair efficiency.