Estimating Ownership and Use of Older CarsEPA Grant Number: R823364
Title: Estimating Ownership and Use of Older Cars
Investigators: McConnell, Virginia D. , Alberini, Anna , Harrington, Winston
Institution: Resources for the Future , University of Colorado at Boulder , University of Maryland - Baltimore
EPA Project Officer: Hahn, Intaek
Project Period: June 12, 1995 through June 11, 1996
Project Amount: $50,000
RFA: Socio-Economics (1995) RFA Text | Recipients Lists
Research Category: Economics and Decision Sciences
Description:This research project examines the factors affecting owners' valuations of their old vehicles using a unique longitudinal dataset that documents the actual decisions of owners of pre-1980 vehicles in Delaware. An equation is developed that explains the value of a vehicle to the owner. Mileage, vintage, condition and maintenance of a vehicle are found to be important predictors of the vehicle's value. The estimated model of vehicle value is used as an input into a simulation model of a 1,000-car fleet representative of California's fleet. Other inputs into the simulation models are the estimated distributions of emissions of hydrocarbons (HC), carbon monoxide (CO) and nitrogen oxides (NOx) in California's fleet, and two equations that link emissions reductions to the cost of repairs. The simulation model is used to examine the role of accelerated vehicle retirement programs (also known as "cash for clunkers" or scrap programs) alone and combined with other policies for reducing emissions, such as current I/M programs and proposed emissions fees. These emissions fees are based on the results of vehicle emissions tests and rely on the IM240 testing technology. The cost-effectiveness (the cost per ton of emissions reduced), the total emissions reductions, and the welfare implications of combining such programs are analyzed. The model incorporates both technical and behavioral relationships, and assumes that of all possible options (repairing the car; scrapping the vehicle or turning it in to an old car scrap program; paying the emissions fee without repairing the vehicle) the owner chooses the one with the least cost. Old car scrap programs are found to potentially increase net welfare under a regulatory program like I/M in practice today, whereas a stand alone scrap program is unlikely to provide very much in the way of emission reductions.
A related paper will model the decision to hold on to or dispose of the vehicle as the solution of a dynamic programming problem. Prices, cost of maintenance, registration and pollution or I/M fees are the constraints faced by the owner.