How and why does ethnic conflict affect the ethnic structure of the marketplace? To answer these questions, this paper merges a unique administrative dataset covering the universe of transactions in the Israeli market for used cars during 1998–2010 with data on the intensity of the Israeli-Palestinian conflict. The analysis shows that violence reduces the number of transactions between Arab sellers and Jewish buyers while increasing the number of transactions between Arab sellers and Arab buyers; violence has no effect on the number of transactions involving Jewish sellers. I relate these findings to the economic literature studying the sources of discrimination.
Bibliographical noteFunding Information:
I thank the editors, Yan Chen and Friederike Mengel, two anonymous reviewers, Noam Zussman and participants of presentations at the Bank of Israel, Bar Ilan University, ESOC conference, Hebrew University and I-Core for useful comments. I am grateful to Ella Dorfman from the Israeli Ministry of Transport and Road Safety for her help with the data, to Victoria Mesihayev for excellent research assistance and to The Maurice Falk Institute for Economic Research in Israel and the I-Core Program of the Planning and Budgeting Committee at the Israel Science Foundation (Grant no. 1821/12 ) for financial support.
© 2016 Elsevier B.V.
- Market for used cars