Scrapping subsidies during the financial crisis - Evidence from the Europe
We study the effects of the car scrapping subsidies in Europe during the financial crisis. We make use of a rich data set of all car models sold in nine European countries, observed at a monthly level during 2005-2011.We employ a difference-in-differences approach, exploiting the fact that different countries adopted their programs at different points in time. We find that the scrapping schemes played a strong role in stabilizing total car sales in 2009: they prevented a total car sales reduction of 17.4% in countries with schemes targeted to low emission vehicles, and they prevented a 14.8% sales reduction in countries with non-targeted schemes. In contrast, the scrapping schemes only had small environmental benefits: without the schemes, average fuel consumption of new purchased cars would have been only 1.3% higher in countries with targeted schemes and 0.5% higher in countries with non-targeted schemes. We do not find evidence of crowding out due to substitution from non-eligible to eligible cars in countries with targeted schemes. Finally, we identify some competitive and trade effects from the schemes: domestic car producers benefited at the expense of foreign competitors in the countries where the schemes were not targeted.
|Date of creation:||Aug 2013|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: +32-(0)16-32 67 25
Fax: +32-(0)16-32 67 96
Web page: http://www.econ.kuleuven.be/ew
More information through EDIRC
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.:
- Pasquale Schiraldi, 2010.
"Automobile Replacement: A DynamicStructural Approach,"
STICERD - Economics of Industry Papers
49, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
- Pasquale Schiraldi, 2011. "Automobile replacement: a dynamic structural approach," RAND Journal of Economics, RAND Corporation, vol. 42(2), pages 266-291, 06.
- Pasquale Schiraldi, 2008. "Automobile replacement: a dynamic structural approach," LSE Research Online Documents on Economics 21780, London School of Economics and Political Science, LSE Library.
- Jerome Adda & Russell Cooper, 1997.
"Balladurette and Juppette: A Discrete Analysis of Scrapping Subsidies,"
0076, Boston University - Industry Studies Programme.
- Jerome Adda & Russell Cooper, 2000. "Balladurette and Juppette: A Discrete Analysis of Scrapping Subsidies," Journal of Political Economy, University of Chicago Press, vol. 108(4), pages 778-806, August.
- Jerome Adda & Russell Cooper, 1997. "Balladurette and Juppette: A Discrete Analysis of Scrapping Subsidies," NBER Working Papers 6048, National Bureau of Economic Research, Inc.
- Adda, Jérôme & Cooper, Russell W., 1997. "Balladurette and jupette: a discrete analysis of scrapping subsidies," CEPREMAP Working Papers (Couverture Orange) 9711, CEPREMAP.
- Meghan Busse & Jorge Silva-Risso & Florian Zettelmeyer, 2006. "$1,000 Cash Back: The Pass-Through of Auto Manufacturer Promotions," American Economic Review, American Economic Association, vol. 96(4), pages 1253-1270, September.
- Marianne Bertrand & Esther Duflo & Sendhil Mullainathan, 2002.
"How Much Should We Trust Differences-in-Differences Estimates?,"
NBER Working Papers
8841, National Bureau of Economic Research, Inc.
- Marianne Bertrand & Esther Duflo & Sendhil Mullainathan, 2004. "How Much Should We Trust Differences-in-Differences Estimates?," The Quarterly Journal of Economics, MIT Press, vol. 119(1), pages 249-275, February.
- Adam Copeland & James Kahn, 2011.
"The production impact of "cash-for-clunkers": implications for stabilization policy,"
503, Federal Reserve Bank of New York.
- Adam Copeland & James Kahn, 2013. "The Production Impact Of “Cash-For-Clunkers”: Implications For Stabilization Policy," Economic Inquiry, Western Economic Association International, vol. 51(1), pages 288-303, 01.
- Orley C. Ashenfelter & Daniel Hosken & Matthew Weinberg, 2009.
"Generating Evidence to Guide Merger Enforcement,"
NBER Working Papers
14798, National Bureau of Economic Research, Inc.
- Omar Licandro & Antonio R. Sampayo, 2005.
"The effects of replacement schemes on car sales: the Spanish case,"
Economics Working Papers
ECO2005/20, European University Institute.
- 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.
- Grigolon, Laura & Leheyda, Nina & Verboven, Frank, 2012.
"Public support for the European car industry: An integrated analysis,"
ZEW Discussion Papers
12-077, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
- Laura GRIGOLON & Nina LEHEYDA & Frank VERBOVEN, 2012. "Public support for the European car industry: an integrated analysis," Center for Economic Studies - Discussion papers ces12.14, Katholieke Universiteit Leuven, Centrum voor Economische Studiën.
- Esteban Susanna, 2007. "Effective Scrappage Subsidies," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 7(1), pages 1-32, February.
- Sriram Venkataraman & Gregor Matvos & Chad Syverson & Business & Business & Ali Hortacsu, 2010.
"Are Consumers Affected by Durable Goods Makers’ Financial Distress? The Case of Auto Manufacturers,"
2010 Meeting Papers
836, Society for Economic Dynamics.
- Ali Hortaçsu & Gregor Matvos & Chad Syverson & Sriram Venkataraman, 2010. "Are Consumers Affected by Durable Goods Makers' Financial Distress? The Case of Auto Manufacturers," NBER Working Papers 16197, National Bureau of Economic Research, Inc.
- Matthew C. Weinberg, 2011. "More Evidence on the Performance of Merger Simulations," American Economic Review, American Economic Association, vol. 101(3), pages 51-55, May.
- Robert W. Hahn, 1995. "An Economic Analysis of Scrappage," RAND Journal of Economics, The RAND Corporation, vol. 26(2), pages 222-242, Summer.
- 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.
When requesting a correction, please mention this item's handle: RePEc:ete:ceswps:ces13.13. 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: (Karla Vander Weyden)
If references are entirely missing, you can add them using this form.