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Competition and Car Longevity

Author

Listed:
  • Hamilton, Bruce W.
  • MacAuley, Molly K.
Abstract
We examine determinants of the nearly 30 percent increase in the average age of domestically produced, registered automobiles since the mid-1960s. We find that very little of the increase in car longevity is attributable to improvements in the inherent durability of cars. Rather, we find that the temporal pattern of longevity improvement is highly correlated with the level of market concentration in the auto industry. In particular, we argue that the arrival of competition in the industry led to an increase in longevity largely by forcing a reduction in the price of auto maintenance and repair, which in turn induced consumers to maintain their cars into older age.

Suggested Citation

  • Hamilton, Bruce W. & MacAuley, Molly K., 1998. "Competition and Car Longevity," Discussion Papers 10581, Resources for the Future.
  • Handle: RePEc:ags:rffdps:10581
    DOI: 10.22004/ag.econ.10581
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    References listed on IDEAS

    as
    1. Eric W. Bond & Larry Samuelson, 1984. "Durable Good Monopolies with Rational Expectations and Replacement Sales," RAND Journal of Economics, The RAND Corporation, vol. 15(3), pages 336-345, Autumn.
    2. repec:ucp:bknber:9780226304557 is not listed on IDEAS
    3. Bruce W Hamilton & Mary Burke, 1996. "The Coase Conjecture in Continuous Time: Imperfect Durability Endogenous Durability and Aftermarkets," Economics Working Paper Archive 362, The Johns Hopkins University,Department of Economics.
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    Cited by:

    1. Ufuk Demiroglu & Caglar Yunculer, 2016. "Estimating light-vehicle sales in Turkey," Central Bank Review, Research and Monetary Policy Department, Central Bank of the Republic of Turkey, vol. 16(3), pages 93-108.
    2. Raouf Boucekkine & Fernando del Río & Blanca Martínez, 2009. "Technological progress, obsolescence, and depreciation," Oxford Economic Papers, Oxford University Press, vol. 61(3), pages 440-466, July.
    3. Karl Storchmann, 2004. "On the Depreciation of Automobiles: An International Comparison," Transportation, Springer, vol. 31(4), pages 371-408, November.
    4. Raouf Boucekkine & Blanca Martínez & Fernando del Río, 2005. "Technological Progress And Depreciation," Working Papers. Serie AD 2005-22, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
    5. Robert H. Porter & Peter Sattler, 1999. "Patterns of Trade in the Market for Used Durables: Theory and Evidence," NBER Working Papers 7149, National Bureau of Economic Research, Inc.
    6. Kumar, Praveen, 2002. "Price and quality discrimination in durable goods monopoly with resale trading," International Journal of Industrial Organization, Elsevier, vol. 20(9), pages 1313-1339, November.

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