The Impact of Scrappage Programmes on the Demand for New Vehicles: Evidence from Spain

Pedro Cantos-Sánchez; Eva Gutiérrez-i-Puigarnau; Ismir Mulalic

doi:10.1016/j.retrec.2017.11.006

The Impact of Scrappage Programmes on the Demand for New Vehicles: Evidence from Spain

Pedro Cantos-Sánchez^*, Eva Gutiérrez-i-Puigarnau, Ismir Mulalic

^*Corresponding author for this work

Research output: Contribution to journal › Journal article › Research › peer-review

Abstract

We evaluate the impact of the Spanish car scrappage programme introduced in May 2009 on short-run car purchases. The scrappage programme was simultaneously discussed and implemented and was therefore exogenous to the consumers. We analyse the effect of this programme on household new car purchase decision and household expenditures. The results show that the scrappage programme increased the probability of buying a new car but decreased the mean expenditure devoted to the purchase of this new vehicle. We also evaluate the effect of financial aid on household welfare. Our best estimate of the welfare gain related to the scrappage programme is very similar to the aid of €1000 offered by the public administrations.

Original language	English
Journal	Research in Transportation Economics
Volume	70
Pages (from-to)	83-96
Number of pages	14
ISSN	0739-8859
DOIs	https://doi.org/10.1016/j.retrec.2017.11.006
Publication status	Published - Oct 2018
Externally published	Yes

Keywords

Car demand
Scrappage programme
Cash for clunkers
Economic crisis
Public subsidies
AIDS model
Household behaviour

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title = "The Impact of Scrappage Programmes on the Demand for New Vehicles: Evidence from Spain",

abstract = "We evaluate the impact of the Spanish car scrappage programme introduced in May 2009 on short-run car purchases. The scrappage programme was simultaneously discussed and implemented and was therefore exogenous to the consumers. We analyse the effect of this programme on household new car purchase decision and household expenditures. The results show that the scrappage programme increased the probability of buying a new car but decreased the mean expenditure devoted to the purchase of this new vehicle. We also evaluate the effect of financial aid on household welfare. Our best estimate of the welfare gain related to the scrappage programme is very similar to the aid of €1000 offered by the public administrations.",

keywords = "Car demand, Scrappage programme, Cash for clunkers, Economic crisis, Public subsidies, AIDS model, Household behaviour",

author = "Pedro Cantos-S{\'a}nchez and Eva Guti{\'e}rrez-i-Puigarnau and Ismir Mulalic",

year = "2018",

month = oct,

doi = "10.1016/j.retrec.2017.11.006",

language = "English",

volume = "70",

pages = "83--96",

journal = "Research in Transportation Economics",

issn = "0739-8859",

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T1 - The Impact of Scrappage Programmes on the Demand for New Vehicles

T2 - Evidence from Spain

AU - Cantos-Sánchez, Pedro

AU - Gutiérrez-i-Puigarnau, Eva

AU - Mulalic, Ismir

PY - 2018/10

Y1 - 2018/10

N2 - We evaluate the impact of the Spanish car scrappage programme introduced in May 2009 on short-run car purchases. The scrappage programme was simultaneously discussed and implemented and was therefore exogenous to the consumers. We analyse the effect of this programme on household new car purchase decision and household expenditures. The results show that the scrappage programme increased the probability of buying a new car but decreased the mean expenditure devoted to the purchase of this new vehicle. We also evaluate the effect of financial aid on household welfare. Our best estimate of the welfare gain related to the scrappage programme is very similar to the aid of €1000 offered by the public administrations.

AB - We evaluate the impact of the Spanish car scrappage programme introduced in May 2009 on short-run car purchases. The scrappage programme was simultaneously discussed and implemented and was therefore exogenous to the consumers. We analyse the effect of this programme on household new car purchase decision and household expenditures. The results show that the scrappage programme increased the probability of buying a new car but decreased the mean expenditure devoted to the purchase of this new vehicle. We also evaluate the effect of financial aid on household welfare. Our best estimate of the welfare gain related to the scrappage programme is very similar to the aid of €1000 offered by the public administrations.

KW - Car demand

KW - Scrappage programme

KW - Cash for clunkers

KW - Economic crisis

KW - Public subsidies

KW - AIDS model

KW - Household behaviour

U2 - 10.1016/j.retrec.2017.11.006

DO - 10.1016/j.retrec.2017.11.006

M3 - Journal article

AN - SCOPUS:85040008161

SN - 0739-8859

VL - 70

SP - 83

EP - 96

JO - Research in Transportation Economics

JF - Research in Transportation Economics

ER -