AN ECONOMETRIC ANALYSIS OF AUTOMOBILE SCRAPPAGE

It has been suggested that a used car is scrapped when its price net of repair costs falls below its scrap value. This simple hypothesis captures the essence of the important idea that the life spans of durable goods are determined by both economic and technical considerations. We present empirical evidence based on an explicit econometric model of the scrappage decision. Analyzing make-model-vintage specific scrappage rates in Israel for 1979, we find that the hypothesized inverse relationship between price and scrappage probability exists and is of striking magnitude. This finding, when combined with the fact that new prices in Israel are almost triple CIF prices, may explain why the median life expectancy of a vehicle in Israel is so much longer than that of a similar vehicle in Western Europe or the United States.

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  • Corporate Authors:

    Operations Research Society of America

    428 East Preston Street
    Baltimore, MD  United States  21202
  • Authors:
    • Manski, C F
    • GOLDIN, E
  • Publication Date: 1983-11

Media Info

Subject/Index Terms

Filing Info

  • Accession Number: 00387794
  • Record Type: Publication
  • Source Agency: National Highway Traffic Safety Administration
  • Report/Paper Numbers: HS-036 477
  • Files: HSL, TRIS, USDOT
  • Created Date: Aug 30 1984 12:00AM