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Gains from trade in used goods: Evidence from automobiles

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  • Clerides, Sofronis

Abstract

I investigate the welfare effects of trade liberalization by exploiting a natural policy experiment in the economy of Cyprus. A 1993 law relaxed import restrictions on used vehicles and enabled the importation of second-hand Japanese automobiles into the country. This led to a dramatic shift of consumer purchases from new to used cars and a substantial expansion of the overall market. Welfare gains computed from a structural demand system average $2000 per purchaser per year over a four-year period after the policy change. The findings are suggestive of the potential for substantial gains from liberalizing trade in used goods.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of International Economics.

Volume (Year): 76 (2008)
Issue (Month): 2 (December)
Pages: 322-336

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Handle: RePEc:eee:inecon:v:76:y:2008:i:2:p:322-336

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Web page: http://www.elsevier.com/locate/inca/505552

Related research

Keywords: Automobile industry Gains from trade Used goods Trade liberalization Cyprus F14 L13 L92;

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References

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Citations

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Cited by:
  1. Kitano, Taiju & Ohashi, Hiroshi, 2009. "Did US safeguards resuscitate Harley-Davidson in the 1980s?," Journal of International Economics, Elsevier, vol. 79(2), pages 186-197, November.
  2. Gavazza, Alessandro & Lizzeri, Alessandro & Rokestkiy, Nikita, 2012. "A quantitative analysis of the used-car market," MPRA Paper 38414, University Library of Munich, Germany.
  3. Lee G. Branstetter & Chirantan Chatterjee & Matthew Higgins, 2011. "Regulation and Welfare: Evidence from Paragraph IV Generic Entry in the Pharmaceutical Industry," NBER Working Papers 17188, National Bureau of Economic Research, Inc.
  4. Alessio D’Amato & Alberto Iozzi & Giovanni Trovato, 2012. "The trade of polyethylene waste: prices or policies?," Environmental Economics and Policy Studies, Society for Environmental Economics and Policy Studies - SEEPS, vol. 14(4), pages 341-356, October.
  5. Davis, Lucas, 2009. "International Trade in Used Vehicles: The Environmental Consequences of NAFTA," Department of Economics, Working Paper Series qt98j8m3r6, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
  6. Clerides, Sofronis & Hadjiyiannis, Costas, 2005. "Trade-Inducing Quality Standards for Used Durables," CEPR Discussion Papers 4838, C.E.P.R. Discussion Papers.
  7. 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.
  8. KITANO Taiju, 2013. "Disguised Protectionism? Environmental Policy in the Japanese Car Market," Discussion papers 13059, Research Institute of Economy, Trade and Industry (RIETI).
  9. Luisito Bertinelli & Eric Strobl & Benteng Zou, 2006. "Polluting technologies and sustainable economic development," Working Papers 379, Bielefeld University, Center for Mathematical Economics.
  10. Tovar, Jorge, 2012. "Consumers’ Welfare and Trade Liberalization: Evidence from the Car Industry in Colombia," World Development, Elsevier, vol. 40(4), pages 808-820.

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