Competition and Car Longevity
AbstractWe examine determinants of the nearly 30 percent increase in the average age of domestically produced, registered automobiles since the mid-1960s. We find that very little of the increase in car longevity is attributable to improvements in the inherent durability of cars. Rather, we find that the temporal pattern of longevity improvement is highly correlated with the level of market concentration in the auto industry. In particular, we argue that the arrival of competition in the industry led to an increase in longevity largely by forcing a reduction in the price of auto maintenance and repair, which in turn induced consumers to maintain their cars into older age.
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Bibliographic InfoPaper provided by Resources For the Future in its series Discussion Papers with number dp-98-20.
Date of creation: 01 Mar 1998
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Other versions of this item:
- NEP-ALL-2006-01-24 (All new papers)
- NEP-COM-2006-01-24 (Industrial Competition)
- NEP-CSE-2006-01-24 (Economics of Strategic Management)
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