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Annual miles drive used car prices

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Author Info

  • Maxim Engers

    (Department of Economics, University of Virginia, Charlottesville, Virginia, USA)

  • Monica Hartmann

    (Department of Economics, University of St Thomas, St Paul, Minnesota, USA)

  • Steven Stern

    (Department of Economics, University of Virginia, Charlottesville, Virginia, USA)

Abstract

This paper investigates whether the net benefits from owning a vehicle, proxied by annual miles driven, explain the price declines observed over a vehicle's life. We first model the household decision on how much to drive each of its vehicles. Then we empirically establish that variation in household annual miles across brands explains observed price declines. Furthermore, the effect of vehicle age on annual miles decisions (and consequently on market value) depends on household characteristics and the composition of the vehicle stock owned. Copyright © 2008 John Wiley & Sons, Ltd.

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File URL: http://hdl.handle.net/10.1002/jae.1034
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Bibliographic Info

Article provided by John Wiley & Sons, Ltd. in its journal Journal of Applied Econometrics.

Volume (Year): 24 (2009)
Issue (Month): 1 ()
Pages: 1-33
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Handle: RePEc:jae:japmet:v:24:y:2009:i:1:p:1-33

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  1. Rust, John, 1985. "Stationary Equilibrium in a Market for Durable Assets," Econometrica, Econometric Society, vol. 53(4), pages 783-805, July.
  2. Matzkin, Rosa L, 1991. "Semiparametric Estimation of Monotone and Concave Utility Functions for Polychotomous Choice Models," Econometrica, Econometric Society, vol. 59(5), pages 1315-27, September.
  3. Stern, Steven, 1996. "Semiparametric estimates of the supply and demand effects of disability on labor force participation," Journal of Econometrics, Elsevier, vol. 71(1-2), pages 49-70.
  4. Chen, Cynthia & Niemeier, Debbie, 2005. "A mass point vehicle scrappage model," Transportation Research Part B: Methodological, Elsevier, vol. 39(5), pages 401-415, June.
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  6. Goldberg, Pinelopi Koujianou, 1998. "The Effects of the Corporate Average Fuel Efficiency Standards in the US," Journal of Industrial Economics, Wiley Blackwell, vol. 46(1), pages 1-33, March.
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  8. Engers, Maxim & Hartmann, Monica & Stern, Steven, 2009. "Are lemons really hot potatoes?," International Journal of Industrial Organization, Elsevier, vol. 27(2), pages 250-263, March.
  9. Berry, Steven & Levinsohn, James & Pakes, Ariel, 1995. "Automobile Prices in Market Equilibrium," Econometrica, Econometric Society, vol. 63(4), pages 841-90, July.
  10. Igal Hendel & Alessandro Lizzeri, 1997. "Adverse Selection in Durable Goods Markets," NBER Working Papers 6194, National Bureau of Economic Research, Inc.
  11. Anna Alberini & Winston Harrington & Virginia McConnell, 1995. "Determinants of Participation in Accelerated Vehicle-Retirement Programs," RAND Journal of Economics, The RAND Corporation, vol. 26(1), pages 93-112, Spring.
  12. Fred Mannering & Clifford Winston, 1985. "A Dynamic Empirical Analysis of Household Vehicle Ownership and Utilization," RAND Journal of Economics, The RAND Corporation, vol. 16(2), pages 215-236, Summer.
  13. Devavrat Purohit, 1992. "Exploring the Relationship Between the Markets for New and Used Durable Goods: The Case of Automobiles," Marketing Science, INFORMS, vol. 11(2), pages 154-167.
  14. Frank Verboven, 2002. "Quality-Based Price Discrimination and Tax Incidence: Evidence from Gasoline and Diesel Cars," RAND Journal of Economics, The RAND Corporation, vol. 33(2), pages 275-297, Summer.
  15. Harrington, Winston & McConnell, Virginia & Alberini, Anna, 1998. "Fleet Turnover and Old Car Scrap Policies," Discussion Papers dp-98-23, Resources For the Future.
  16. Choo, Sangho & Mokhtarian, Patricia L., 2004. "What type of vehicle do people drive? The role of attitude and lifestyle in influencing vehicle type choice," Transportation Research Part A: Policy and Practice, Elsevier, vol. 38(3), pages 201-222, March.
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Cited by:
  1. X. D'Haultfoeuille & P. Givord & X. Boutin, 2011. "The Environmental Effect of Green Taxation: the Case of the French "Bonus/Malus"," Documents de Travail de la DESE - Working Papers of the DESE g2011-14, Institut National de la Statistique et des Etudes Economiques, DESE.

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