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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Paper provided by European University Institute in its series Economics Working Papers with number
ECO2005/20.
Length: Date of creation: 2005 Date of revision: Handle: RePEc:eui:euiwps:eco2005/20
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