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Article
Gains from Trade in Used Goods: Evidence from Automobiles
Journal of International Economics (2008)
  • Sofronis Clerides, University of 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.

Keywords
  • Automobile industry,
  • Gains from trade,
  • Used goods,
  • Trade liberalization,
  • Cyprus
Publication Date
December, 2008
Citation Information
Sofronis Clerides. "Gains from Trade in Used Goods: Evidence from Automobiles" Journal of International Economics Vol. 76 Iss. 2 (2008)
Available at: http://works.bepress.com/sofronis_clerides/2/