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

Abstract:
Using national data on vehicles in operation, we examine long-run changes in scrappage patterns in passenger cars and light trucks in the United States between 1969 and 2014. We find that the average lifetime for passenger cars has increased from 12.2 to 15.6 years between 1970s and the 2000s. Our central estimate of the elasticity of scrappage with respect to vehicle prices is -0.4, which is substantially different than values adopted in simulation models. These estimates imply that many policies aimed at reducing gasoline consumption, including Corporate Average Fuel Economy standards and gasoline taxes may produce changes in the used vehicle market that are different than prior studies suggest. We also note that consumer scrappage behavior seems to respond more strongly to changes in vehicle price than changes in gasoline price than standard theory would predict.

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Keywords: Automobiles, Scrappage, Technology Innovation, Pollution Controls, Used Vehicles

DOI: 10.5547/01956574.39.1.aben

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Published in Volume 39, Number 1 of The Quarterly Journal of the IAEE's Energy Economics Education Foundation.