Prof. Alessandro Gavazza of London School of Economics on mortgages, cars and market friction
Scientific Sense ®
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Can Policy Affect Market Design?
The way policy can affect market design is a very interesting type of question. In the UK, there are no 30-year fixed interest rates. The fixation period on the mortgage is usually between two and five years. And as a result, there are these cross subsidies that we were describing previously.
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