The impact of scrappage programmes on the demand for new vehicles: Evidence from Spain

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 de...

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Bibliographic Details
Published in:Research in transportation economics 2018-10, Vol.70, p.83-96
Main Authors: Cantos-Sánchez, Pedro, Gutiérrez-i-Puigarnau, Eva, Mulalic, Ismir
Format: Article
Language:English
Subjects:
AIDS model
Car demand
Cash for clunkers
Economic crisis
Household behaviour
Public subsidies
Scrappage programme
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Summary: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.
ISSN:0739-8859
1875-7979
DOI:10.1016/j.retrec.2017.11.006