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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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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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References

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  1. Choo, Sangho & Mokhtarian, Patricia L., 2004. "What type of vehicle do people drive? The role of attitude and lifestyle in influencing vehicle type choice," University of California Transportation Center, Working Papers qt7vg1057g, University of California Transportation Center.
  2. 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.
  3. Igal Hendel & Alessandro Lizzeri, 1997. "Adverse Selection in Durable Goods Markets," NBER Working Papers 6194, National Bureau of Economic Research, Inc.
  4. Robert H. Porter & Peter Sattler, 1999. "Patterns of Trade in the Market for Used Durables: Theory and Evidence," NBER Working Papers 7149, National Bureau of Economic Research, Inc.
  5. 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.
  6. 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.
  7. 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.
  8. 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.
  9. Harrington, Winston & McConnell, Virginia & Alberini, Anna, 1998. "Fleet Turnover and Old Car Scrap Policies," Discussion Papers dp-98-23, Resources For the Future.
  10. Chen, Cynthia & Niemeier, Debbie, 2005. "A mass point vehicle scrappage model," Transportation Research Part B: Methodological, Elsevier, vol. 39(5), pages 401-415, June.
  11. Berry, Steven & Levinsohn, James & Pakes, Ariel, 1995. "Automobile Prices in Market Equilibrium," Econometrica, Econometric Society, vol. 63(4), pages 841-90, July.
  12. Rust, John, 1985. "Stationary Equilibrium in a Market for Durable Assets," Econometrica, Econometric Society, vol. 53(4), pages 783-805, July.
  13. 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.
  14. 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.
  15. Heckman, James J & Ichimura, Hidehiko & Todd, Petra, 1998. "Matching as an Econometric Evaluation Estimator," Review of Economic Studies, Wiley Blackwell, vol. 65(2), pages 261-94, April.
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Cited by:
  1. Bruno de Borger & Jan Rouwendal, 2012. "Car User Taxes, Quality Characteristics and Fuel Efficiency: Household Behavior and Market Adjustment," Tinbergen Institute Discussion Papers 12-122/VIII, Tinbergen Institute, revised 17 Jun 2013.
  2. Pauline Givord, 2011. "Essay on Four Issues in Public Policy Evaluation," Sciences Po publications info:hdl:2441/53r60a8s3ku, Sciences Po.
  3. Gilmore, Elisabeth A. & Lave, Lester B., 2013. "Comparing resale prices and total cost of ownership for gasoline, hybrid and diesel passenger cars and trucks," Transport Policy, Elsevier, vol. 27(C), pages 200-208.
  4. Xavier d'Haultfoeuille & Pauline Givord & Xavier Boutin, 2012. "The environmental Effect of Green Taxation : The case of the french "Bonus/Malus"," Working Papers 2012-13, Centre de Recherche en Economie et Statistique.
  5. repec:spo:wpecon:info:hdl:2441/53r60a8s3kup1vc9je5h30d2n is not listed on IDEAS

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