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Vehicle Lifetime Trends and Scrappage Behavior in the U.S. Used Car Market

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Document pages: 50 pages

Abstract: Using the most comprehensive publicly available data, we examine long-run changes in scrappage patterns in passenger cars and light trucks in the United States between 1969 and 1999. We find that the expected lifetime for passenger cars has increased from 12.5 to 14 years between 1969 and 1999. Our central estimate of the elasticity of scrappage with respect to vehicle prices is -0.83, which is substantially lower than reported in prior studies. These results imply that many public policies aimed at reducing gasoline consumption, including corporate average fuel economy standards and gasoline taxes, may be less effective than prior studies suggest. We also note that consumer scrappage behavior seems to respond more strongly to changes in vehicle price than to changes in gasoline price than standard theory would predict.

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