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The Impact of Environmental Fraud on the Used Car Market: Evidence from Dieselgate

Author

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  • Itai Ater
  • Nir S. Yoseph

Abstract

This study explores the effects of Volkswagen’s 2015 emissions scandal (‘Dieselgate’) on the used car market in Israel. Using a difference‐in‐differences research design and administrative and proprietary data, we find that after Dieselgate the number of transactions involving VW‐manipulated cars fell by 18%, and the resale price of these cars fell by 6%. The drop in the number of transactions was concentrated among private sellers. We discuss alternative explanations and suggest that lower willingness‐to‐pay and adverse selection following Dieselgate could explain our findings.

Suggested Citation

  • Itai Ater & Nir S. Yoseph, 2022. "The Impact of Environmental Fraud on the Used Car Market: Evidence from Dieselgate," Journal of Industrial Economics, Wiley Blackwell, vol. 70(2), pages 463-491, June.
    • Handle: RePEc:bla:jindec:v:70:y:2022:i:2:p:463-491
    DOI: 10.1111/joie.12276
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    References listed on IDEAS

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    Cited by:

    1. A’aeshah Alhakamy & Areej Alhowaity & Anwar Abdullah Alatawi & Hadeel Alsaadi, 2023. "Are Used Cars More Sustainable? Price Prediction Based on Linear Regression," Sustainability, MDPI, vol. 15(2), pages 1-17, January.
    2. Latino, Carmelo & Pelizzon, Loriana & Riedel, Max, 2023. "How to green the European Auto ABS market? A literature survey," SAFE Working Paper Series 391, Leibniz Institute for Financial Research SAFE.
    3. Sajid, Muhammed & Zakkariya, K.A. & Suki, Norazah Mohd & Islam, Jamid Ul, 2024. "When going green goes wrong: The effects of greenwashing on brand avoidance and negative word-of-mouth," Journal of Retailing and Consumer Services, Elsevier, vol. 78(C).
    4. Ascensión Andina‐Díaz & Javier Campos & Juan‐Luis Jiménez & Jordi Perdiguero, 2024. "Strategic advertising in the aftermath of a corporate scandal," Manchester School, University of Manchester, vol. 92(6), pages 663-699, December.
    5. Marino, M. & Parrotta, P. & Sala, D. & Valletta, G., 2024. "The Volkswagen emissions scandal: Exploring the role of environmental concern and social norms," Journal of Environmental Economics and Management, Elsevier, vol. 127(C).
    6. Ubay Pérez-Granja & Ascensión Andina-Díaz & Juan Luis Jiménez, 2024. "Volcanic eruptions and tourism prosocial consumption," Tourism Economics, , vol. 30(8), pages 1973-2001, December.

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