Gains from Trade in Used Goods: Evidence from Automobiles

33 Pages Posted: 29 Jul 2008

See all articles by Sofronis Clerides

Sofronis Clerides

University of Cyprus; Centre for Economic Policy Research (CEPR); University of Bologna - Rimini Center for Economic Analysis (RCEA)

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Date Written: July 2008

Abstract

I investigate the welfare effects of trade liberalization by exploiting a natural policy experiment in the economy of Cyprus. A 1993 law relaxed import restrictions on used vehicles and enabled the importation of second-hand Japanese automobiles into the country. This led to a dramatic shift of consumer purchases from new to used cars and a substantial expansion of the overall market. Welfare gains computed from a structural demand system average $2,000 per purchaser in a four year period after the policy change. The findings are suggestive of the potential for substantial gains from liberalizing trade in used goods.

Keywords: automobile industry, gains from trade, used goods, trade liberalization, Cyprus

JEL Classification: F14, L13, L92

Suggested Citation

Clerides, Sofronis, Gains from Trade in Used Goods: Evidence from Automobiles (July 2008). Journal of International Economics, Forthcoming, Available at SSRN: https://ssrn.com/abstract=1185251

Sofronis Clerides (Contact Author)

University of Cyprus ( email )

75 Kallipoleos Street
P.O. Box 20537
1678 Nicosia
Cyprus
+357 2289 3709 (Phone)
+357 2289 5049 (Fax)

HOME PAGE: http://sofronis.clerides.com

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

University of Bologna - Rimini Center for Economic Analysis (RCEA) ( email )

Via Patara, 3
Rimini (RN), RN 47900
Italy

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