Scrapping subsidies during the financial crisis: Evidence from Europe
AbstractWe study the effects of the car scrapping subsidies in Europe during the financial crisis. We make use of a rich data set of all car models sold in nine European countries, observed at a monthly level during 2005-2011.We employ a difference-in-differences approach, exploiting the fact that different countries adopted their programs at different points in time. We find that the scrapping schemes played a strong role in stabilizing total car sales in 2009: they prevented a total car sales reduction of 17.4% in countries with schemes targeted to low emission vehicles, and they prevented a 14.8% sales reduction in countries with non-targeted schemes. In contrast, the scrapping schemes only had small environmental benefits: without the schemes, average fuel consumption of new purchased cars would have been only 1.3% higher in countries with targeted schemes and 0.5% higher in countries with non-targeted schemes. We do not find evidence of crowding out due to substitution from non-eligible to eligible cars in countries with targeted schemes. Finally, we identify some competitive and trade effects from the schemes: domestic car producers benefited at the expense of foreign competitors in the countries where the schemes were not targeted. --
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research in its series ZEW Discussion Papers with number 13-079.
Date of creation: 2013
Date of revision:
scrapping subsidies; economic assessment of state aid; financial crisis; automobile market;
Find related papers by JEL classification:
- H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
- L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods
- F14 - International Economics - - Trade - - - Empirical Studies of Trade
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-11-14 (All new papers)
- NEP-EUR-2013-11-14 (Microeconomic European Issues)
- NEP-TRE-2013-11-14 (Transport Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Li, Shanjun & Linn, Joshua & Spiller, Elisheba, 2013. "Evaluating “Cash-for-Clunkers”: Program effects on auto sales and the environment," Journal of Environmental Economics and Management, Elsevier, vol. 65(2), pages 175-193.
- Grigolon, Laura & Leheyda, Nina & Verboven, Frank, 2012.
"Public support for the European car industry: An integrated analysis,"
ZEW Discussion Papers
12-077, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
- Laura GRIGOLON & Nina LEHEYDA & Frank VERBOVEN, 2012. "Public support for the European car industry: an integrated analysis," Center for Economic Studies - Discussion papers ces12.14, Katholieke Universiteit Leuven, Centrum voor Economische Studiën.
- Adam Copeland & James Kahn, 2013.
"The Production Impact Of “Cash-For-Clunkers”: Implications For Stabilization Policy,"
Western Economic Association International, vol. 51(1), pages 288-303, 01.
- Adam Copeland & James Kahn, 2011. "The production impact of "cash-for-clunkers": implications for stabilization policy," Staff Reports 503, Federal Reserve Bank of New York.
- Esteban Susanna, 2007. "Effective Scrappage Subsidies," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 7(1), pages 1-32, February.
- Orley Ashenfelter & Daniel Hosken & Matthew Weinberg, 2009.
"Generating Evidence to Guide Merger Enforcement,"
Competition Policy International, vol. 5.
- Orley C. Ashenfelter & Daniel Hosken & Matthew Weinberg, 2009. "Generating Evidence to Guide Merger Enforcement," NBER Working Papers 14798, National Bureau of Economic Research, Inc.
- Orley C. Ashenfelter & Daniel Hosken & Matthew Weinberg, 2009. "Generating Evidence to Guide Merger Enforcement," Working Papers 1137, Princeton University, Department of Economics, Center for Economic Policy Studies..
- Omar Licandro & Antonio R. Sampayo, 2005.
"The effects of replacement schemes on car sales: the Spanish case,"
Economics Working Papers
ECO2005/20, European University Institute.
- Omar Licandro & Antonio R. Sampayo, 2006. "The effects of replacement schemes on car sales: the Spanish case," Investigaciones Economicas, Fundación SEPI, vol. 30(2), pages 239-282, May.
- Matthew C. Weinberg, 2011. "More Evidence on the Performance of Merger Simulations," American Economic Review, American Economic Association, vol. 101(3), pages 51-55, May.
- Pasquale Schiraldi, 2011.
"Automobile replacement: a dynamic structural approach,"
RAND Journal of Economics,
RAND Corporation, vol. 42(2), pages 266-291, 06.
- Pasquale Schiraldi, 2010. "Automobile Replacement: A DynamicStructural Approach," STICERD - Economics of Industry Papers 49, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
- Pasquale Schiraldi, 2008. "Automobile replacement: a dynamic structural approach," LSE Research Online Documents on Economics 21780, London School of Economics and Political Science, LSE Library.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (ZBW - German National Library of Economics).
If references are entirely missing, you can add them using this form.