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Does Government Activism Affect Second-hand Car Prices? Evidence from a Natural Experiment

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  • Saibal Ghosh

Abstract

A significant body of literature has focused on the impact of policy changes on consumption behaviour. Most of this literature looks at the impact of anticipated and durable changes, thereby ignoring the impact of unanticipated changes. In this context, exploiting a unique data set for India, the article examines the impact of a temporary ‘odd–even’ policy experiment in Delhi on second-hand car prices. The findings suggest that car prices on average, declined by 2.7 per cent after the policy announcement, although these prices subsequently recouped the initial losses. A disaggregation of car prices in terms of costs indicates that these results are driven by low-priced cars and, additionally, that cars with odd-number ending registrations commanded a premium in the market.

Suggested Citation

  • Saibal Ghosh, 2018. "Does Government Activism Affect Second-hand Car Prices? Evidence from a Natural Experiment," Margin: The Journal of Applied Economic Research, National Council of Applied Economic Research, vol. 12(1), pages 1-18, February.
    • Handle: RePEc:sae:mareco:v:12:y:2018:i:1:p:1-18
    DOI: 10.1177/0973801017738388
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