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Sorting in the used-car market after the Volkswagen emission scandal

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  • Strittmatter, Anthony
  • Lechner, Michael

Abstract

The disclosure of the VW emission manipulation scandal caused a quasi-experimental market shock to the observable environmental quality of VW diesel vehicles. To investigate the impact of environmental quality on the market, we collect data from a used-car online advertisement platform. We find that the supply of used VW diesel vehicles increases after the VW emission scandal. The positive supply effects increase with the probability of manipulation. Furthermore, we find negative impacts on the asking prices of used cars subject to a high probability of manipulation. We rationalize these findings with a model for sorting by the environmental quality of used cars.

Suggested Citation

  • Strittmatter, Anthony & Lechner, Michael, 2020. "Sorting in the used-car market after the Volkswagen emission scandal," Journal of Environmental Economics and Management, Elsevier, vol. 101(C).
    • Handle: RePEc:eee:jeeman:v:101:y:2020:i:c:s0095069620300280
    DOI: 10.1016/j.jeem.2020.102305
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    2. Inge van den Bijgaart & Davide Cerruti, 2024. "The Effect of Information on Market Activity: Evidence from Vehicle Recalls," The Review of Economics and Statistics, MIT Press, vol. 106(1), pages 230-245, January.
    3. Hasan, Iftekhar & Noth, Felix & Tonzer, Lena, 2019. "Thou shalt not bear false witness against your customers: Cultural norms and the Volkswagen scandal," IWH Discussion Papers 21/2019, Halle Institute for Economic Research (IWH).
    4. Annika Maria Ziegler & Norbert Brunner & Manfred Kühleitner, 2020. "The Markets of Green Cars of Three Countries: Analysis Using Lotka–Volterra and Bertalanffy–Pütter Models," JOItmC, MDPI, vol. 6(3), pages 1-19, August.
    5. Hasan, Iftekhar & Noth, Felix & Tonzer, Lena, 2023. "Cultural norms and corporate fraud: Evidence from the Volkswagen scandal," Journal of Corporate Finance, Elsevier, vol. 82(C).
    6. Gøril L. Andreassen & Jo Thori Lind, 2024. "Climate, Technology and Value: Insights from the First Decade with Mass-Consumption of Electric Vehicles," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 87(7), pages 1783-1844, July.
    7. Blaise Melly & Rafael Lalive, 2020. "Estimation, Inference, and Interpretation in the Regression Discontinuity Design," Diskussionsschriften dp2016, Universitaet Bern, Departement Volkswirtschaft.

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    More about this item

    Keywords

    Supply of used cars; Environmental quality; Sorting; Difference-in-differences; Management fraud;
    All these keywords.

    JEL classification:

    • Q59 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Other
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
    • L62 - Industrial Organization - - Industry Studies: Manufacturing - - - Automobiles; Other Transportation Equipment; Related Parts and Equipment

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