Download this Paper Open PDF in Browser

Gains from Trade in Used Goods: Evidence from Automobiles

35 Pages Posted: 5 Jan 2005 Last revised: 31 Jul 2008

Sofronis Clerides

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

Multiple version iconThere are 2 versions of this paper

Date Written: March 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, differentiated products, gains from trade, used goods, trade liberalization

JEL Classification: F14, L13, L92

Suggested Citation

Clerides, Sofronis, Gains from Trade in Used Goods: Evidence from Automobiles (March 2008). Available at SSRN: https://ssrn.com/abstract=640902 or http://dx.doi.org/10.2139/ssrn.640902

Sofronis Clerides (Contact Author)

University of Cyprus - Department of Economics ( email )

75 Kallipoleos Street
P.O. Box 20537
1678 Nicosia
Cyprus
+35 7 2289 2450 (Phone)
+35 7 2289 2432 (Fax)

Centre for Economic Policy Research (CEPR) ( email )

77 Bastwick Street
London, EC1V 3PZ
United Kingdom

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

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

Paper statistics

Downloads
280
Rank
80,369
Abstract Views
3,006