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Gains from trade in used goods: Evidence from automobiles

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  • Clerides, Sofronis
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 $2000 per purchaser per year over a four-year period after the policy change. The findings are suggestive of the potential for substantial gains from liberalizing trade in used goods.

Suggested Citation

  • Clerides, Sofronis, 2008. "Gains from trade in used goods: Evidence from automobiles," Journal of International Economics, Elsevier, vol. 76(2), pages 322-336, December.
    • Handle: RePEc:eee:inecon:v:76:y:2008:i:2:p:322-336
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    Cited by:

    1. Sofronis Clerides & Costas Hadjiyiannis, 2004. "Trade-Inducing Quality Standards for Used Durables," University of Cyprus Working Papers in Economics 5-2004, University of Cyprus Department of Economics.
    2. Alessandro Gavazza & Alessandro Lizzeri & Nikita Roketskiy, 2014. "A Quantitative Analysis of the Used-Car Market," American Economic Review, American Economic Association, vol. 104(11), pages 3668-3700, November.
    3. Tovar, Jorge, 2012. "Consumers’ Welfare and Trade Liberalization: Evidence from the Car Industry in Colombia," World Development, Elsevier, vol. 40(4), pages 808-820.
    4. Sylvain Prado, 2010. "A Family Hitch: Econometrics of the New and the Used Car Markets," Working Papers hal-04140927, HAL.
    5. Prudence Dato, 2017. "Economic analysis of e-waste market," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 17(6), pages 815-837, December.
    6. Lee Branstetter & Chirantan Chatterjee & Matthew J. Higgins, 2016. "Regulation and welfare: evidence from paragraph IV generic entry in the pharmaceutical industry," RAND Journal of Economics, RAND Corporation, vol. 47(4), pages 857-890, November.
    7. Oda, Hiromu & Noguchi, Hiroki & Fuse, Masaaki, 2022. "Review of life cycle assessment for automobiles: A meta-analysis-based approach," Renewable and Sustainable Energy Reviews, Elsevier, vol. 159(C).
    8. Lucas W. Davis & Matthew E. Kahn, 2010. "International Trade in Used Vehicles: The Environmental Consequences of NAFTA," American Economic Journal: Economic Policy, American Economic Association, vol. 2(4), pages 58-82, November.
    9. Kwarteng Michael Adu & Pilík Michal & Juřičková Eva, 2018. "Beyond cost saving. Other factor consideration in online purchases of used electronic goods: a conjoint analysis approach," Management & Marketing, Sciendo, vol. 13(3), pages 1051-1063, September.
    10. Berri, Akli & Vincent Lyk-Jensen, Stéphanie & Mulalic, Ismir & Zachariadis, Theodoros, 2014. "Household transport consumption inequalities and redistributive effects of taxes: A repeated cross-sectional evaluation for France, Denmark and Cyprus," Transport Policy, Elsevier, vol. 36(C), pages 206-216.
    11. Danilo Pelletiere & Kenneth Reinert, 2010. "World Exports of New and Used Automobiles: A Gravity Model Comparison among the European Union, Japan and the United States," International Economic Journal, Taylor & Francis Journals, vol. 24(1), pages 103-110.
    12. Anatolie Coșciug & Silviu Marian Ciobanu & József Benedek, 2017. "The Safety of Transnational Imported Second-Hand Cars: A Case Study on Vehicle-to-Vehicle Crashes in Romania," Sustainability, MDPI, vol. 9(12), pages 1-14, December.
    13. Bernard, Sophie, 2015. "North–south trade in reusable goods: Green design meets illegal shipments of waste," Journal of Environmental Economics and Management, Elsevier, vol. 69(C), pages 22-35.
    14. Kitano, Taiju & Ohashi, Hiroshi, 2009. "Did US safeguards resuscitate Harley-Davidson in the 1980s?," Journal of International Economics, Elsevier, vol. 79(2), pages 186-197, November.
    15. Berri, Akli & Vincent Lyk-Jensen, Stéphanie & Mulalic, Ismir & Zachariadis, Theodoros, 2014. "Household transport consumption inequalities and redistributive effects of taxes: A repeated cross-sectional evaluation for France, Denmark and Cyprus," Transport Policy, Elsevier, vol. 36(C), pages 206-216.
    16. BERTINELLI, Luisito & STROBL, Eric & ZOU, Benteng, 2006. "Polluting technologies and sustainable economic development," LIDAM Discussion Papers CORE 2006052, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    17. Callejas, Jerónimo & Linn,Joshua Abraham & Steinbuks,Jevgenijs, 2022. "Welfare and Environmental Benefits of Electric Vehicle Tax Policies in DevelopingCountries : Evidence from Colombia," Policy Research Working Paper Series 10001, The World Bank.
    18. David Lagakos, 2016. "Explaining Cross-Country Productivity Differences in Retail Trade," Journal of Political Economy, University of Chicago Press, vol. 124(2), pages 579-620.
    19. Adamos Adamou & Sofronis Clerides, 2021. "The evolution of car ownership in Cyprus," Cyprus Economic Policy Review, University of Cyprus, Economics Research Centre, vol. 15(1), pages 1-15, June.
    20. KITANO Taiju, 2013. "Disguised Protectionism? Environmental Policy in the Japanese Car Market," Discussion papers 13059, Research Institute of Economy, Trade and Industry (RIETI).
    21. Prudence Dato, 2015. "Economic analysis of e-waste market under imperfect information," Working Papers halshs-01172148, HAL.
    22. Alessio D’Amato & Alberto Iozzi & Giovanni Trovato, 2012. "The trade of polyethylene waste: prices or policies?," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 14(4), pages 341-356, October.

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    More about this item

    Keywords

    Automobile industry Gains from trade Used goods Trade liberalization Cyprus F14 L13 L92;

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L92 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Railroads and Other Surface Transportation

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