Economics of Automobile Leasing: The Call Option Value
Journal of Consumer AffairsPublished 1 June 1995
Stephen E. Miller
Citations19
SJR quartileQ1
SJR score0.83
SNIP0.97
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Abstract
Previous analyses of the automobile lease versus purchase decision have ignored the value of the call option embedded in closed‐end leases with guaranteed buy back provisions. This paper shows that ignoring the value of this call option results in a bias against leasing in the lease versus purchase decision. Supporting evidence is provided by an empirical model of automobile lease rates.
Keywords
Economics, Econometrics and FinanceBusiness, Management and Accounting
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