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Gains from trade in used goods: Evidence from automobiles

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  • Clerides, Sofronis

Abstract

I investigate the welfare effects of trade liberalization by exploiting a natural policy experiment in the economy of Cyprus. A 1993 law relaxed import restrictions on used vehicles and enabled the importation of second-hand Japanese automobiles 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. Welfare gains computed from a structural demand system average $2000 per purchaser per year over a four-year period after the policy change. The findings are suggestive of the potential for substantial gains from liberalizing trade in used goods.

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  • Clerides, Sofronis, 2008. "Gains from trade in used goods: Evidence from automobiles," Journal of International Economics, Elsevier, vol. 76(2), pages 322-336, December.
  • Handle: RePEc:eee:inecon:v:76:y:2008:i:2:p:322-336
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    References listed on IDEAS

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    Cited by:

    1. Tovar, Jorge, 2012. "Consumers’ Welfare and Trade Liberalization: Evidence from the Car Industry in Colombia," World Development, Elsevier, vol. 40(4), pages 808-820.
    2. Sylvain Prado, 2010. "A Family Hitch : Econometrics of the New and the Used Car Markets," EconomiX Working Papers 2010-4, University of Paris Nanterre, EconomiX.
    3. Alessandro Gavazza & Alessandro Lizzeri & Nikita Roketskiy, 2014. "A Quantitative Analysis of the Used-Car Market," American Economic Review, American Economic Association, vol. 104(11), pages 3668-3700, November.
    4. Kitano, Taiju & Ohashi, Hiroshi, 2009. "Did US safeguards resuscitate Harley-Davidson in the 1980s?," Journal of International Economics, Elsevier, vol. 79(2), pages 186-197, November.
    5. Berri, Akli & Vincent Lyk-Jensen, Stéphanie & Mulalic, Ismir & Zachariadis, Theodoros, 2014. "Household transport consumption inequalities and redistributive effects of taxes: A repeated cross-sectional evaluation for France, Denmark and Cyprus," Transport Policy, Elsevier, vol. 36(C), pages 206-216.
    6. BERTINELLI, Luisito & STROBL, Eric & ZOU, Benteng, 2006. "Polluting technologies and sustainable economic development," CORE Discussion Papers 2006052, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    7. Prudence Dato, 2015. "Economic analysis of e-waste market under imperfect information," Working Papers halshs-01172148, HAL.
    8. Alessio D’Amato & Alberto Iozzi & Giovanni Trovato, 2012. "The trade of polyethylene waste: prices or policies?," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 14(4), pages 341-356, October.
    9. Sofronis Clerides & Costas Hadjiyiannis, 2004. "Trade-Inducing Quality Standards for Used Durables," University of Cyprus Working Papers in Economics 5-2004, University of Cyprus Department of Economics.
    10. repec:spr:ieaple:v:17:y:2017:i:6:d:10.1007_s10784-017-9350-4 is not listed on IDEAS
    11. Lee G. Branstetter & Chirantan Chatterjee & Matthew Higgins, 2011. "Regulation and Welfare: Evidence from Paragraph IV Generic Entry in the Pharmaceutical Industry," NBER Working Papers 17188, National Bureau of Economic Research, Inc.
    12. Lucas W. Davis & Matthew E. Kahn, 2010. "International Trade in Used Vehicles: The Environmental Consequences of NAFTA," American Economic Journal: Economic Policy, American Economic Association, vol. 2(4), pages 58-82, November.
    13. Berri, Akli & Vincent Lyk-Jensen, Stéphanie & Mulalic, Ismir & Zachariadis, Theodoros, 2014. "Household transport consumption inequalities and redistributive effects of taxes: A repeated cross-sectional evaluation for France, Denmark and Cyprus," Transport Policy, Elsevier, vol. 36(C), pages 206-216.
    14. repec:gam:jsusta:v:9:y:2017:i:12:p:2380-:d:123723 is not listed on IDEAS
    15. Bernard, Sophie, 2015. "North–south trade in reusable goods: Green design meets illegal shipments of waste," Journal of Environmental Economics and Management, Elsevier, vol. 69(C), pages 22-35.
    16. KITANO Taiju, 2013. "Disguised Protectionism? Environmental Policy in the Japanese Car Market," Discussion papers 13059, Research Institute of Economy, Trade and Industry (RIETI).

    More about this item

    Keywords

    Automobile industry Gains from trade Used goods Trade liberalization Cyprus F14 L13 L92;

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L92 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Railroads and Other Surface Transportation

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