Invites you to a School seminar presented by

Fedor Iskhakov

(Australian National University)

Equilibrium Trade in Automobiles

Co-authors:
Kenneth Gillingham (Yale University)
Anders Munk-Nielsen (University of Copenhagen)                                                                       John Rust (Georgetown University)
Bertel Schjerning (University of Copenhagen)

Thursday 20 April 2023

11.00am – 12.30pm

Zoom: 885 5440 9844

Abstract: We introduce a computationally tractable dynamic equilibrium model of automobile markets with heterogeneous consumers who choose to keep their car or trade for a different make, model and age. We focus on stationary flow equilibria, where outflows of cars due to accidents and endogenous scrappage equal inflows of new cars. We introduce a fast robust algorithm for computing equilibria and use it to estimate a model with eight household types and four car types using nearly 39 million observations on car ownership transitions from Denmark. The estimated model fits the data well and counterfactual simulations show that Denmark is over the top of the Laffer curve: it 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 revenues, and car ownership, while reducing car ages, driving, and CO2 emissions.

For further information contact: School seminar series coordinators
Ye Lu (ye.lu1@sydney.edu.au) & Alastair Fraser (alastair.fraser@sydney.edu.au)

For all upcoming seminars in School of Economics see Our events and Calendar