IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this article or follow this journal

Automobile replacement: a dynamic structural approach

  • Pasquale Schiraldi

This paper specifies and estimates a structural dynamic model of consumer demand for newand used durable goods. Its primary contribution is to provide an explicit estimationprocedure for transaction costs, which are crucial to capturing the dynamic nature ofconsumer decisions. In particular, transaction costs play a key role in determining consumerreplacement behavior in both primary and secondary markets for durable goods. The uniquedata set used in this paper has been collected by the Italian Motor Registry and covers theperiod from 1994 to 2004. It includes information about sales dates for individual cars overtime as well as the initial stock of cars in the sample period. Identification of transactioncosts is achieved from the variation in the share of consumers choosing to hold a given cartype each period, and from the share of consumers choosing to purchase the same car typethat period. Specifically, I estimate a random coefficients discrete choice model thatincorporates a dynamic optimal stopping problem in the spirit of Rust (1987). I apply thismodel to evaluate the impact of scrappage subsidies on the Italian automobile market in 1997and 1998.

(This abstract was borrowed from another version of this item.)

If 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.

File URL: http://hdl.handle.net/10.1111/j.1756-2171.2011.00133.x
Download Restriction: Access to full text is restricted to subscribers.

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Article provided by RAND Corporation in its journal RAND Journal of Economics.

Volume (Year): 42 (2011)
Issue (Month): 2 (06)
Pages: 266-291

as
in new window

Handle: RePEc:bla:randje:v:42:y:2011:i:2:p:266-291
Contact details of provider: Postal: 1776 Main Street, P.O. Box 2138, Santa Monica, California 90407-2138
Phone: 310-393-0411
Fax: 310-393-4818
Web page: http://www.blackwellpublishing.com/journal.asp?ref=0741-6261
Email:


More information through EDIRC

Order Information: Web: http://www.blackwellpublishing.com/journal.asp?ref=0741-6261

References listed on IDEAS
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.:

as in new window
  1. Brett R. Gordon, 2009. "A Dynamic Model of Consumer Replacement Cycles in the PC Processor Industry," Marketing Science, INFORMS, vol. 28(5), pages 846-867, 09-10.
  2. Robert W. Hahn, 1995. "An Economic Analysis of Scrappage," RAND Journal of Economics, The RAND Corporation, vol. 26(2), pages 222-242, Summer.
  3. Berry, Steven & Levinsohn, James & Pakes, Ariel, 1995. "Automobile Prices in Market Equilibrium," Econometrica, Econometric Society, vol. 63(4), pages 841-90, July.
  4. Jerome Adda & Russell Cooper, 1997. "Balladurette and Juppette: A Discrete Analysis of Scrapping Subsidies," NBER Working Papers 6048, National Bureau of Economic Research, Inc.
  5. Hideo Konishi & Michael Sandfort, 2000. "Existence of Stationary Equilibrium in the Markets for New and Used Durable Goods," Boston College Working Papers in Economics 450, Boston College Department of Economics.
  6. Brownstone, David & Train, Kenneth, 1999. "Forecasting new product penetration with flexible substitution patterns," University of California Transportation Center, Working Papers qt1j6814b3, University of California Transportation Center.
  7. Gautam Gowrisankaran & Marc Rysman, 2009. "Dynamics of Consumer Demand for New Durable Goods," NBER Working Papers 14737, National Bureau of Economic Research, Inc.
  8. Alessandro Lizzeri & Igal Hendel, 1999. "Adverse Selection in Durable Goods Markets," American Economic Review, American Economic Association, vol. 89(5), pages 1097-1115, December.
  9. Susanna Esteban & Matthew Shum, 2007. "Durable-goods oligopoly with secondary markets: the case of automobiles," RAND Journal of Economics, RAND Corporation, vol. 38(2), pages 332-354, 06.
  10. Rust, John, 1987. "Optimal Replacement of GMC Bus Engines: An Empirical Model of Harold Zurcher," Econometrica, Econometric Society, vol. 55(5), pages 999-1033, September.
  11. Robert H. Porter & Peter Sattler, 1999. "Patterns of Trade in the Market for Used Durables: Theory and Evidence," NBER Working Papers 7149, National Bureau of Economic Research, Inc.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:bla:randje:v:42:y:2011:i:2:p:266-291. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley-Blackwell Digital Licensing)

or (Christopher F. Baum)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.