Qualitative Effects of Cash-for-Clunkers Programs

41 Pages Posted: 17 Nov 2009

See all articles by Eugenio J. Miravete

Eugenio J. Miravete

University of Texas at Austin; Centre for Economic Policy Research (CEPR)

Maria J. Moral

National Distance Education University (UNED)

Date Written: October 2009

Abstract

We document how automobile scrappage incentives similar to the '2009 Car Allowance Rebate System' (cars) may influence drivers' tastes in favor of fuel-efficient automobiles. Between 1994 and 2000 the market share of diesel automobiles doubled after Spanish government sponsored two scrappage programs. We show that demand for diesel automobiles was not driven only by better mileage; that gasoline and diesel models became closer substitutes over time; and that automobile manufacturers reduced their markups on gasoline automobiles as their demand decreased. These programs simply accelerated a change of preference that was already on its way when they were implemented.

Keywords: Diesel Technology, Diffusion of New Durable Goods, Fuel Efficiency, Scrappage Programs

JEL Classification: L51, L62, Q28

Suggested Citation

Miravete, Eugenio J. and Moral Rincón, Maria J., Qualitative Effects of Cash-for-Clunkers Programs (October 2009). CEPR Discussion Paper No. DP7517, Available at SSRN: https://ssrn.com/abstract=1507513

Eugenio J. Miravete (Contact Author)

University of Texas at Austin ( email )

Department of Economics
1 University Station C3100
Austin, TX 78712-0301
United States
512-232-1718 (Phone)
512-471-3510 (Fax)

HOME PAGE: http://www.eco.utexas.edu/facstaff/Miravete

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Maria J. Moral Rincón

National Distance Education University (UNED) ( email )

Calle Bravo Murillo, 38
Madrid 28006, Madrid 28040
Spain

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