IDEAS home Printed from https://ideas.repec.org/a/eee/jeeman/v65y2013i2p175-193.html
   My bibliography  Save this article

Evaluating “Cash-for-Clunkers”: Program effects on auto sales and the environment

Author

Listed:
  • Li, Shanjun
  • Linn, Joshua
  • Spiller, Elisheba

Abstract

“Cash-for-Clunkers” was a $3 billion program that attempted to stimulate the U.S. economy and improve the environment by encouraging consumers to retire older vehicles and purchase fuel-efficient new vehicles. We investigate the effects of this program on new vehicle sales and the environment. Using Canada as the control group in a difference-in-differences framework, we find that, of the 0.68 million transactions that occurred under the program, the program increased new vehicle sales only by about 0.37 million during July and August of 2009, implying that approximately 45 percent of the spending went to consumers who would have purchased a new vehicle anyway. Our results cannot reject the hypothesis that there is little or no gain in sales beyond 2009. The program will reduce CO2 emissions by only 9–28.2 million tons based on upper and lower bounds of the estimate of the program effect on sales, implying a cost per ton ranging from $92 to $288 even after accounting for reduced criteria pollutants.

Suggested Citation

  • 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.
  • Handle: RePEc:eee:jeeman:v:65:y:2013:i:2:p:175-193
    DOI: 10.1016/j.jeem.2012.07.004
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0095069612000678
    Download Restriction: Full text for ScienceDirect subscribers only

    File URL: https://libkey.io/10.1016/j.jeem.2012.07.004?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Gilbert E. Metcalf, 2008. "Using Tax Expenditures to Achieve Energy Policy Goals," American Economic Review, American Economic Association, vol. 98(2), pages 90-94, May.
    2. Kenneth A. Small & Kurt Van Dender, 2007. "Fuel Efficiency and Motor Vehicle Travel: The Declining Rebound Effect," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 25-52.
    3. Ali Hortacsu & Gregor Matvos & Chaehee Shin & Chad Syverson & Sriram Venkataraman, 2011. "Is an Automaker's Road to Bankruptcy Paved with Customers' Beliefs?," American Economic Review, American Economic Association, vol. 101(3), pages 93-97, May.
    4. Thomas Klier & Joshua Linn, 2010. "The Price of Gasoline and New Vehicle Fuel Economy: Evidence from Monthly Sales Data," American Economic Journal: Economic Policy, American Economic Association, vol. 2(3), pages 134-153, August.
    5. Shanjun Li & Christopher Timmins & Roger H. von Haefen, 2009. "How Do Gasoline Prices Affect Fleet Fuel Economy?," American Economic Journal: Economic Policy, American Economic Association, vol. 1(2), pages 113-137, August.
    6. Steven T. Berry, 1994. "Estimating Discrete-Choice Models of Product Differentiation," RAND Journal of Economics, The RAND Corporation, vol. 25(2), pages 242-262, Summer.
    7. Knittel, Christopher R, 2009. "The Implied Cost of Carbon Dioxide under the Cash for Clunkers," Institute of Transportation Studies, Working Paper Series qt95b1c3t0, Institute of Transportation Studies, UC Davis.
    8. Nicholas Z. Muller & Robert Mendelsohn, 2009. "Efficient Pollution Regulation: Getting the Prices Right," American Economic Review, American Economic Association, vol. 99(5), pages 1714-1739, December.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Shanjun Li & Joshua Linn & Erich Muehlegger, 2014. "Gasoline Taxes and Consumer Behavior," American Economic Journal: Economic Policy, American Economic Association, vol. 6(4), pages 302-342, November.
    2. Rivers, Nicholas & Schaufele, Brandon, 2017. "Gasoline price and new vehicle fuel efficiency: Evidence from Canada," Energy Economics, Elsevier, vol. 68(C), pages 454-465.
    3. Linn, Joshua, "undated". "Explaining the Adoption of Diesel Fuel Passenger Cars in Europe," Discussion Papers dp-14-08-rev, Resources For the Future.
    4. Chao Wei & Shanjun Li, 2014. "The Cost of Greening Stimulus: A Dynamic Discrete Choice Analysis of Vehicle Scrappage Programs," Working Papers 2014-12, The George Washington University, Institute for International Economic Policy.
    5. Allcott, Hunt & Mullainathan, Sendhil & Taubinsky, Dmitry, 2014. "Energy policy with externalities and internalities," Journal of Public Economics, Elsevier, vol. 112(C), pages 72-88.
    6. Burke, Paul J. & Nishitateno, Shuhei, 2013. "Gasoline prices, gasoline consumption, and new-vehicle fuel economy: Evidence for a large sample of countries," Energy Economics, Elsevier, vol. 36(C), pages 363-370.
    7. Marrouch, Walid & Mourad, Jana, 2019. "Effect of gasoline prices on car fuel efficiency: Evidence from Lebanon," Energy Policy, Elsevier, vol. 135(C).
    8. Joshua Linn, 2016. "The Rebound Effect for Passenger Vehicles," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2).
    9. Anderson, Soren T. & Kellogg, Ryan & Sallee, James M., 2013. "What do consumers believe about future gasoline prices?," Journal of Environmental Economics and Management, Elsevier, vol. 66(3), pages 383-403.
    10. Linn, Joshua, 2014. "Explaining the Adoption of Diesel Fuel Passenger Cars in Europe," Discussion Papers dp-14-08, Resources For the Future.
    11. Liu, Yizao, 2010. "Gasoline Prices, Fuel Economy Efficiency And Automobile Replacement Dynamics," Working Paper series 148290, University of Connecticut, Charles J. Zwick Center for Food and Resource Policy.
    12. Givord, Pauline & Grislain-Letrémy, Céline & Naegele, Helene, 2018. "How do fuel taxes impact new car purchases? An evaluation using French consumer-level data," Energy Economics, Elsevier, vol. 74(C), pages 76-96.
    13. Yalta, A. Talha & Yalta, A. Yasemin, 2016. "The dynamics of fuel demand and illegal fuel activity in Turkey," Energy Economics, Elsevier, vol. 54(C), pages 144-158.
    14. Nicholas Rivers & Brandon Schaufele, 2017. "New vehicle feebates," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 50(1), pages 201-232, February.
    15. Greene, David L. & Sims, Charles B. & Muratori, Matteo, 2020. "Two trillion gallons: Fuel savings from fuel economy improvements to US light-duty vehicles, 1975–2018," Energy Policy, Elsevier, vol. 142(C).
    16. Weber, Sylvain, 2019. "Consumers' preferences on the Swiss car market: A revealed preference approach," Transport Policy, Elsevier, vol. 75(C), pages 109-118.
    17. Sébastien Houde, 2014. "How Consumers Respond to Environmental Certification and the Value of Energy Information," NBER Working Papers 20019, National Bureau of Economic Research, Inc.
    18. Cristian Huse & Claudio Lucinda, 2014. "The Market Impact and the Cost of Environmental Policy: Evidence from the Swedish Green Car Rebate," Economic Journal, Royal Economic Society, vol. 124(578), pages 393-419, August.
    19. Huse, Cristian, 2014. "Fast and Furious (and Dirty): How Asymmetric Regulation May Hinder Environmental Policy," MPRA Paper 48909, University Library of Munich, Germany.
    20. Li, Shanjun & Linn, Joshua & Spiller, Elisheba, 2010. "Evaluating “Cash-for-Clunkers”: Program Effect on Auto Sales, Jobs, and the Environment," Discussion Papers dp-10-39, Resources For the Future.

    More about this item

    Keywords

    Stimulus; Cash-for-Clunkers; Auto demand; CO2 emissions;
    All these keywords.

    JEL classification:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jeeman:v:65:y:2013:i:2:p:175-193. 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: . General contact details of provider: http://www.elsevier.com/locate/inca/622870 .

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/622870 .

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.