Competition and Car Longevity

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.


Subject(s):
Issue Date:
1998
Publication Type:
Working or Discussion Paper
PURL Identifier:
http://purl.umn.edu/10581
Total Pages:
31
JEL Codes:
L1; L9
Series Statement:
Discussion Paper 98-20




 Record created 2017-04-01, last modified 2017-08-23

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