TY  - JOUR
AU  - Ramey,Valerie A.
AU  - Shapiro,Matthew D.
TI  - Displaced Capital
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 6775
PY  - 1998
Y2  - October 1998
UR  - http://www.nber.org/papers/w6775
L1  - http://www.nber.org/papers/w6775.pdf
N1  - Author contact info:
Valerie A. Ramey
Department of Economics, 0508
University of California, San Diego
9500 Gilman Drive
La Jolla, CA 92093-0508
Tel: 858/534-2388
Fax: 858/534-7040
E-Mail: VRAMEY@UCSD.EDU

Matthew D. Shapiro
Department of Economics
University of Michigan
611 Tappan St
Ann Arbor, MI 48109-1220
Tel: 734/764-5419
Fax: 734 764-2769
E-Mail: shapiro@umich.edu
AB  - This paper studies the efficiency with which physical capital can be reallocated across sectors. It presents a model of a firm selling specialized capital in a thin resale market.  The model predicts that the selling price depends not only on the sectoral specificity of capital, but also on the thinness of the market and the discount factor of the firm.  It then provides empirical evidence on the sectoral mobility of capital based on equipment-level data from aerospace industry auctions.  These data track the flow of used capital across industries, as well as the discounts at which the capital sells. The results suggest substantial sectoral specificity of capital.  Capital that flowed out of the sector sold for only one-third of its estimated replacement cost.
ER  -