Effective Scrappage Subsidies

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dc.contributor.author Esteban, Susanna
dc.date.accessioned 2016-03-09T12:05:02Z
dc.date.available 2016-03-09T12:05:02Z
dc.date.issued 2007
dc.identifier.bibliographicCitation The B.E. Journal of Theoretical Economics. 2007, vol. 7, nº 1, (Contributions), Article 9, p. 1200- 1200
dc.identifier.issn 1935-1704
dc.identifier.uri http://hdl.handle.net/10016/4988
dc.description.abstract It is a common practice for governments to offer scrappage subsidies in order to stimulate the early removal of used cars and modify the distribution of vehicle holdings. In this paper, we analyze the market implications of such subsidies when producers have market power and face competition from a secondary used car market. One key result is that, with market power, a subsidy can induce scrappage even if it pays less than the price of a used car in the absence of the subsidy. We provide a full characterization of the effects of scrappage subsidies on primary and secondary markets for the case of a monopoly, and show that the subsidy that maximizes aggregate welfare lowers prices in the used car market. Our results contrast with the predictions derived from a model with perfect competition.
dc.format.mimetype application/pdf
dc.language.iso eng
dc.publisher De Gruyter
dc.rights © De Gruyter
dc.subject.other scrappage subsidy
dc.subject.other secondary market
dc.subject.other market power
dc.subject.other automobile industry
dc.title Effective Scrappage Subsidies
dc.type article
dc.type.review PeerReviewed
dc.description.status Publicado
dc.relation.publisherversion http://dx.doi.org/10.2202/1935-1704.1200
dc.subject.eciencia Economía
dc.identifier.doi 10.2202/1935-1704.1200
dc.rights.accessRights openAccess
dc.type.version acceptedVersion
dc.identifier.publicationissue 1
dc.identifier.publicationtitle The B.E. Journal of Theoretical Economics
dc.identifier.publicationvolume 7
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