Equilibrium Trade in Automobile Markets / Kenneth Gillingham, Fedor Iskhakov, Anders Munk-Nielsen, John P. Rust, Bertel Schjerning.

Format:

Book

Author/Creator:

Gillingham, Kenneth.

Contributor:

National Bureau of Economic Research.

Iskhakov, Fedor.

Munk-Nielsen, Anders.

Rust, John P.

Schjerning, Bertel.

Series:

Working Paper Series (National Bureau of Economic Research) no. w25840.

NBER working paper series no. w25840

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2019.

Summary:

We introduce a computationally tractable dynamic equilibrium model of the automobile market where new and used cars of multiple types (e.g. makes/models) are traded by heterogeneous consumers. Prices and quantities are determined endogenously to equate supply and demand for all car types and vintages, along with the ages at which cars are scrapped. The model allows for transactions costs, taxes, flexible specifications of car characteristics, consumer preferences, and heterogeneity. We apply the model to two examples: a revenue-neutral replacement of the new vehicle registration tax with a higher fuel tax and a hypothetical "merger to monopoly" in an oligopolistic new car market. We show substantial gains in consumer welfare from the tax policy change, as well as important effects on government revenues, automobile prices, driving, fuel consumption and CO₂ emissions, while the merger leads to substantial welfare losses.

Notes:

Print version record

May 2019.