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Macroeconomics of the New and the Used Car Markets

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Author Info

  • Sylvain M. Prado

    ()
    (EconomiX-CNRS, University of Paris Ouest, France and GE Capital Solutions Europe in London, UK)

Abstract

The new cars of today are used cars of tomorrow and some people assume a competition between new and used markets. There are numerous, preconceived ideas and academic theories regarding the interactions between primary and secondary markets. To investigate the relations, we provide a macroeconomic analysis of the French, the British and the US car markets. We aim at answering the following questions. What are the interactions between the new and the second-hand car markets? Can we use the interactions to estimate the car prices of tomorrow? Our results indicate that the relations appear limited for France and the UK, whereas the US market faces a Scitovscky mechanism, defined by constant disequilibrium and multiple interactions between primary and secondary markets. Furthermore, they illustrate that the interrelations are not strong enough to fully explain and forecast market patterns.

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File URL: http://www.accessecon.com/Pubs/EB/2010/Volume30/EB-10-V30-I3-P170.pdf
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Bibliographic Info

Article provided by AccessEcon in its journal Economics Bulletin.

Volume (Year): 30 (2010)
Issue (Month): 3 ()
Pages: 1862-1884

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Handle: RePEc:ebl:ecbull:eb-10-00227

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Related research

Keywords: second-hand market; automotive market; prices; causality; cyclical correlations; VAR.;

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  1. Fiorito, Riccardo & Kollintzas, Tryphon, 1994. "Stylized facts of business cycles in the G7 from a real business cycles perspective," European Economic Review, Elsevier, vol. 38(2), pages 235-269, February.
  2. Dickey, David A & Fuller, Wayne A, 1981. "Likelihood Ratio Statistics for Autoregressive Time Series with a Unit Root," Econometrica, Econometric Society, vol. 49(4), pages 1057-72, June.
  3. François Lescaroux & Valérie Mignon, 2008. "On the Influence of Oil Prices on Economic Activity and Other Macroeconomic and Financial Variables," Working Papers 2008-05, CEPII research center.
  4. Sylvain Prado, 2010. "A Family Hitch : Econometrics of the New and the Used Car Markets," EconomiX Working Papers 2010-4, University of Paris West - Nanterre la Défense, EconomiX.
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