Equilibrium Trade in Automobiles
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Equilibrium Trade in Automobiles. / Gillingham, Kenneth; Iskhakov, Fedor; Munk-Nielsen, Anders; Rust, John; Schjerning, Bertel.
In: Journal of Political Economy, Vol. 130, No. 10, 2022, p. 2534-2593.Research output: Contribution to journal › Journal article › Research › peer-review
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TY - JOUR
T1 - Equilibrium Trade in Automobiles
AU - Gillingham, Kenneth
AU - Iskhakov, Fedor
AU - Munk-Nielsen, Anders
AU - Rust, John
AU - Schjerning, Bertel
N1 - Publisher Copyright: © 2022 The University of Chicago. All rights reserved. Published by The University of Chicago Press.
PY - 2022
Y1 - 2022
N2 - We introduce a computationally tractable dynamic equilibrium model of automobile markets with heterogeneous consumers, focused on stationary flow equilibria. We introduce a fast, robust algorithm for computing equilibria and use it to estimate a model using nearly 39 million observations on car ownership transitions from Denmark. The estimated model fits the data well, and counterfactual simulations show that Denmark could raise total tax revenue by reducing the new-car registration tax rate. We show that reducing this tax rate while raising the tax rate on fuel increases aggregate welfare, tax revenue, and car ownership, while reducing car ages, driving, and CO2 emissions.
AB - We introduce a computationally tractable dynamic equilibrium model of automobile markets with heterogeneous consumers, focused on stationary flow equilibria. We introduce a fast, robust algorithm for computing equilibria and use it to estimate a model using nearly 39 million observations on car ownership transitions from Denmark. The estimated model fits the data well, and counterfactual simulations show that Denmark could raise total tax revenue by reducing the new-car registration tax rate. We show that reducing this tax rate while raising the tax rate on fuel increases aggregate welfare, tax revenue, and car ownership, while reducing car ages, driving, and CO2 emissions.
U2 - 10.1086/720463
DO - 10.1086/720463
M3 - Journal article
AN - SCOPUS:85133969063
VL - 130
SP - 2534
EP - 2593
JO - Journal of Political Economy
JF - Journal of Political Economy
SN - 0022-3808
IS - 10
ER -
ID: 336457812