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The effects of replacement schemes on car sales: the Spanish case

Author

Listed:
  • Omar Licandro

    (European University Institute and FEDEA)

  • Antonio R. Sampayo

    (University of Santiago)

Abstract

This paper studies a model of car replacement designed to evaluate policies addressed to influence replacement decisions. An aggregate hazard function is computed from optimal replacement rules of heterogeneous consumers, which mimics the hump—shaped hazard function observed for the Spanish car market. The model is calibrated to evaluate quantitatively the Plan Prever, a replacement scheme introduced in Spain in 1997, finding that the positive effect of the subsidy is high in the short run but small in the long run for both sales and the average age of the stock.

Suggested Citation

  • 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.
    • Handle: RePEc:iec:inveco:v:30:y:2006:i:2:p:239-282
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    Cited by:

    1. Fabrice Collard & Omar Licandro, 2025. "The Neoclassical Model and the Welfare Costs of Selection"," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 57, July.
    2. Huang, Jian & Leng, Mingming & Liang, Liping & Luo, Chunlin, 2014. "Qualifying for a government’s scrappage program to stimulate consumers’ trade-in transactions? Analysis of an automobile supply chain involving a manufacturer and a retailer," European Journal of Operational Research, Elsevier, vol. 239(2), pages 363-376.
    3. Paredes, Joan, 2017. "Subsidising car purchases in the euro area: any spill-over on production?," Working Paper Series 2094, European Central Bank.
    4. Klößner, Stefan & Pfeifer, Gregor, 2015. "Synthesizing Cash for Clunkers: Stabilizing the Car Market, Hurting the Environment," VfS Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 113207, Verein für Socialpolitik / German Economic Association.
    5. Cantos-Sánchez, Pedro & Gutiérrez-i-Puigarnau, Eva & Mulalic, Ismir, 2018. "The impact of scrappage programmes on the demand for new vehicles: Evidence from Spain," Research in Transportation Economics, Elsevier, vol. 70(C), pages 83-96.
    6. Grigolon, Laura & Leheyda, Nina & Verboven, Frank, 2016. "Scrapping subsidies during the financial crisis — Evidence from Europe," International Journal of Industrial Organization, Elsevier, vol. 44(C), pages 41-59.
    7. Ashok Kaul & Gregor Pfeifer & Stefan Witte, 2016. "The incidence of Cash for Clunkers: Evidence from the 2009 car scrappage scheme in Germany," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 23(6), pages 1093-1125, December.
    8. Roberto M. Samaniego & Juliana Yu Sun, 2022. "The Embodiment Controversy: On the Policy Implications of Vintage Capital Models," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 54(5), pages 1175-1222, August.
    9. Javier Asensio & Anna Matas & Josep-Lluís Raymond, 2025. "Policies to reduce cars’ emissions between the opposing forces of technological change and demand for characteristics," Working Papers wpdea2502, Department of Applied Economics at Universitat Autonoma of Barcelona.
    10. Carine Bouthevillain & John Caruana & Cristina Checherita & Jorge Cunha & Esther Gordo & Stephan Haroutunian & Geert Langenus & Amela Hubic & Bernhard Manzke & Javier J. Pérez & Pietro Tommasino, 2009. "Pros and cons of various fiscal measures to stimulate the economy," Economic Bulletin, Banco de España, issue JUL, pages 123-144, July.
    11. Jiménez, Juan Luis & Perdiguero, Jordi & García, Carmen, 2016. "Evaluation of subsidies programs to sell green cars: Impact on prices, quantities and efficiency," Transport Policy, Elsevier, vol. 47(C), pages 105-118.

    More about this item

    Keywords

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    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household

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