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The effects of replacement schemes on car sales: the Spanish case

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Author Info

  • Omar Licandro

    (European University Institute and FEDEA)

  • Antonio R. Sampayo

    (University of Santiago)

Abstract

This paper studies a model of car replacement designed to evaluate policies addressed to influence replacement decisions. An aggregate hazard function is computed from optimal replacement rules of heterogeneous consumers, which mimics the hump—shaped hazard function observed for the Spanish car market. The model is calibrated to evaluate quantitatively the Plan Prever, a replacement scheme introduced in Spain in 1997, finding that the positive effect of the subsidy is high in the short run but small in the long run for both sales and the average age of the stock.

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File URL: ftp://ftp.fundacionsepi.es/InvEcon/paperArchive/May2006/v30i2a3.pdf
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Bibliographic Info

Article provided by Fundación SEPI in its journal Investigaciones Economicas.

Volume (Year): 30 (2006)
Issue (Month): 2 (May)
Pages: 239-282

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Handle: RePEc:iec:inveco:v:30:y:2006:i:2:p:239-282

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Postal: Investigaciones Economicas Fundación SEPI Quintana, 2 (planta 3) 28008 Madrid Spain
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Related research

Keywords: Car scrapping; replacement schemes; heterogeneous consumers;

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References

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  1. Jerome Adda & Russell Cooper, 2000. "Balladurette and Juppette: A Discrete Analysis of Scrapping Subsidies," Journal of Political Economy, University of Chicago Press, vol. 108(4), pages 778-806, August.
  2. Ricardo J. Caballero & Eduardo M.R.A. Engel, 1992. "Microeconomic Adjustment Hazards and Aggregate Dynamics," NBER Working Papers 4090, National Bureau of Economic Research, Inc.
  3. Baltas, N.C. & Xepapadeas, A., 1999. "Accelerating Vehicle Replacement and Environmental Protection: the Case of Passenger Cars in Greece," Athens University of Economics and Business 108, Athens University of Economics and Business, Department of International and European Economic Studies.
  4. Rust, John, 1987. "Optimal Replacement of GMC Bus Engines: An Empirical Model of Harold Zurcher," Econometrica, Econometric Society, vol. 55(5), pages 999-1033, September.
  5. John Haltiwanger & Russell Cooper & Laura Power, 1999. "Machine Replacement and the Business Cycle: Lumps and Bumps," American Economic Review, American Economic Association, vol. 89(4), pages 921-946, September.
  6. Mario Izquierdo & Omar Licandro & Alberto Maydey, . "Car quality improvements and price indices in Spain," Studies on the Spanish Economy 121, FEDEA.
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Citations

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Cited by:
  1. Leheyda, Nina & Verboven, Frank, 2013. "Scrapping subsidies during the financial crisis: Evidence from Europe," ZEW Discussion Papers 13-079, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  2. Carine Bouthevillain & John Caruana & Cristina Checherita & Jorge Cunha & Esther Gordo & Stephan Haroutunian & Amela Hubic & Geert Langenus & Bernhard Manzke & Javier J. Pérez & Pietro Tommasino, 2009. "Pros and Cons of various fiscal measures to stimulate the economy," BCL working papers 40, Central Bank of Luxembourg.

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