publication . Article . 2008

Gains from Trade in Used Goods: Evidence from Automobiles

Sofronis Clerides;
Open Access
  • Published: 01 Jan 2008 Journal: Journal of International Economics, volume 76, pages 322-336 (issn: 0022-1996, Copyright policy)
  • Publisher: Elsevier BV
  • Country: Cyprus
Abstract
I investigate the welfare effects of trade liberalization by exploiting a natural policy experiment in the economy of Cyprus. A 1993 law relaxed import restrictions on used vehicles and enabled the importation of second-hand Japanese automobiles into the country. This led to a dramatic shift of consumer purchases from new to used cars and a substantial expansion of the overall market. Welfare gains computed from a structural demand system average $2000 per purchaser per year over a four-year period after the policy change. The findings are suggestive of the potential for substantial gains from liberalizing trade in used goods. © 2008 Elsevier B.V. All rights res...
Subjects
free text keywords: Cyprus, welfare impact, Asia, Automobile industry, Eurasia, F14, Gains from trade, import, L13, L92, Middle East, trade agreement, trade flow, Trade liberalization, trade reform, Used goods, Economics and Econometrics, Finance
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