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Clunkers or Junkers? Adverse Selection in a Vehicle Retirement Program

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  • Ryan Sandler

Abstract

Vehicle retirement programs have become popular tools of public policy for reducing pollution. The efficacy of these programs is difficult to measure, as it is difficult to tell how much a vehicle would have polluted otherwise. I estimate that counterfactual using data from a long-running local program in California. I utilize the universe of emissions inspections from the California Smog Check Program to construct vehicle usage histories of retired cars and similar vehicles which did not retire early. I find that the program's cost-effectiveness steadily declined over time because of the depreciation of the vehicle fleet, while adverse selection remained a problem throughout. (JEL D82, Q53, Q58, R48)

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File URL: http://www.aeaweb.org/articles.php?doi=10.1257/pol.4.4.253
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Bibliographic Info

Article provided by American Economic Association in its journal American Economic Journal: Economic Policy.

Volume (Year): 4 (2012)
Issue (Month): 4 (November)
Pages: 253-81

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Handle: RePEc:aea:aejpol:v:4:y:2012:i:4:p:253-81

Note: DOI: 10.1257/pol.4.4.253
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Cited by:
  1. Anna Alberini & Will Gans & Charles Towe, 2013. "Free Riding, Upsizing, and Energy Efficiency Incentives in Maryland Homes," Working Papers 2013.82, Fondazione Eni Enrico Mattei.
  2. Werner Antweiler & Sumeet Gulati, 2013. "Market-Based Policies for Green Motoring in Canada," Canadian Public Policy, University of Toronto Press, vol. 39(s2), pages 81-94, August.
  3. Christopher R. Knittel & Ryan Sandler, 2013. "The Welfare Impact of Indirect Pigouvian Taxation: Evidence from Transportation," NBER Working Papers 18849, National Bureau of Economic Research, Inc.

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