Working Paper: CEPR ID: DP7517
Authors: Eugenio J. Miravete; Maria J. Moral
Abstract: We document how automobile scrappage incentives similar to the ?2009 Car Allowance Rebate System? (cars) may influence drivers? tastes in favor of fuel-efficient automobiles. Between 1994 and 2000 the market share of diesel automobiles doubled after Spanish government sponsored two scrappage programs. We show that demand for diesel automobiles was not driven only by better mileage; that gasoline and diesel models became closer substitutes over time; and that automobile manufacturers reduced their markups on gasoline automobiles as their demand decreased. These programs simply accelerated a change of preference that was already on its way when they were implemented.
Keywords: Diesel; Technology; Diffusion of New Durable Goods; Fuel Efficiency; Scrappage Programs
JEL Codes: L51; L62; Q28
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| scrappage subsidies (H23) | change in demand for diesel automobiles (J23) |
| scrappage programs (L99) | increased demand for diesel models (R22) |
| scrappage programs (L99) | market share of diesel automobiles (L92) |
| scrappage programs (L99) | manufacturers adjusting markups on gasoline vehicles (L62) |
| scrappage programs (L99) | increase in diesel vehicle sales (L92) |
| scrappage programs (L99) | consumer preferences towards smaller, more fuel-efficient vehicles (D12) |