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Gains from Trade in Used Goods: Evidence from the Global Market for Automobiles

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  • Sofronis Clerides

Abstract

This paper investigates the welfare effects of trade liberalization by exploiting a natural policy experiment in the small open economy of Cyprus. A 1993 law relaxed import restrictions on used vehicles and facilitated the flow of used Japanese vehicles into the country. This led to a dramatic shift of consumer purchases from new to used cars and a substantial expansion of the overall market. Estimated welfare gains are of the order of several hundred dollars per purchaser. The findings are indicative of the potential for substantial gains from liberalizing trade in used goods, which could also alter trade flows and production

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File URL: http://papers.econ.ucy.ac.cy/RePEc/papers/6-2004.pdf
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Bibliographic Info

Paper provided by University of Cyprus Department of Economics in its series University of Cyprus Working Papers in Economics with number 6-2004.

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Length: 25 pages
Date of creation: Dec 2004
Date of revision:
Handle: RePEc:ucy:cypeua:6-2004

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Web page: http://www.econ.ucy.ac.cy

Related research

Keywords: automobile industry; differentiated products; gains from trade; used goods; trade liberalization;

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References

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  11. Clerides, Sofronis & Hadjiyiannis, Costas, 2005. "Trade-Inducing Quality Standards for Used Durables," CEPR Discussion Papers 4838, C.E.P.R. Discussion Papers.
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  23. repec:rus:hseeco:121669 is not listed on IDEAS
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  26. repec:cup:etheor:v:13:y:1997:i:2:p:185-213 is not listed on IDEAS
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Citations

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Cited by:
  1. Nkunde Mwase, 2006. "An Empirical Investigation of the Exchange Rate Pass-Through to Inflation in Tanzania," IMF Working Papers 06/150, International Monetary Fund.
  2. Clerides, Sofronis, 2008. "Gains from trade in used goods: Evidence from automobiles," Journal of International Economics, Elsevier, vol. 76(2), pages 322-336, December.
  3. Clerides, Sofronis & Hadjiyiannis, Costas, 2008. "Quality standards for used durables: An indirect subsidy?," Journal of International Economics, Elsevier, vol. 75(2), pages 268-282, July.

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