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Car Age, Taxation, Scrappage Premiums and the ELV Directive

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  • Sandström, F. Mikael

    (Sveriges Riksdag)

Abstract

A chain of replacement model is used to examine the effects of automobile taxes and of a scrappage premium on the life length of cars, and on the size of the car fleet. The predictions of the model are tested on data on the scrappage of cars in Sweden 1989-2002. The theoretical model predicts that increased taxes on the purchase of cars should increase the life length of cars, and reduce the number of cars. A scrappage premium would have the opposite effects. Changes in periodic taxes would have no effects on the life length of automobiles, but would reduce the size of the car stock. The econometric analysis indicates, however, that the effects both on the life-length of cars, and on the size of the car parc are small. On the basis of the conclusions from the theoretical and the empirical analysis, the possible implications of the European Union's Directive 2000/53/EC on end-of life vehicles (ELV) are discussed.

Suggested Citation

  • Sandström, F. Mikael, 2003. "Car Age, Taxation, Scrappage Premiums and the ELV Directive," Working Paper Series 591, Research Institute of Industrial Economics.
    • Handle: RePEc:hhs:iuiwop:0591
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    References listed on IDEAS

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    1. Alberini, Anna & Harrington, Winston & McConnell, Virginia, 1996. "Estimating an Emissions Supply Function from Accelerated Vehicle Retirement Programs," The Review of Economics and Statistics, MIT Press, vol. 78(2), pages 251-265, May.
    2. 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.
    3. Innes, Robert, 1996. "Regulating Automobile Pollution under Certainty, Competition, and Imperfect Information," Journal of Environmental Economics and Management, Elsevier, vol. 31(2), pages 219-239, September.
    4. Robert W. Hahn, 1995. "An Economic Analysis of Scrappage," RAND Journal of Economics, The RAND Corporation, vol. 26(2), pages 222-242, Summer.
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    Cited by:

    1. Lorentziadis, Panos L. & Vournas, Stylianos G., 2011. "A quantitative model of accelerated vehicle-retirement induced by subsidy," European Journal of Operational Research, Elsevier, vol. 211(3), pages 623-629, June.
    2. Santos, Georgina & Behrendt, Hannah & Maconi, Laura & Shirvani, Tara & Teytelboym, Alexander, 2010. "Part I: Externalities and economic policies in road transport," Research in Transportation Economics, Elsevier, vol. 28(1), pages 2-45.
    3. K. Forslind, 2008. "The effect of a premium in the Swedish car scrapping scheme: an econometric study," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 9(1), pages 43-55, March.

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    More about this item

    Keywords

    Taxes; Automobiles; Accelerated Vehicle Retirement Programs; Scrappage; ELV Directive;
    All these keywords.

    JEL classification:

    • H29 - Public Economics - - Taxation, Subsidies, and Revenue - - - Other
    • L62 - Industrial Organization - - Industry Studies: Manufacturing - - - Automobiles; Other Transportation Equipment; Related Parts and Equipment
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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