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The effect of a premium in the Swedish car scrapping scheme: an econometric study

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  • K. Forslind

Abstract

In order to handle the increasing problem of abandoned end-of-life vehicles (ELVs) in Sweden, an incentive system was introduced in 1975. One of the cornerstones of the system is a premium received by the owner when an ELV is returned for dismantling. The premium is intended to create an economic incentive to return the ELV. The European Union (EU) directive regarding extended producer responsibility for ELVs does not demand any incentive system. This study applied time series econometrics to model the relationship between the number of returned ELVs and the size of the premium using Swedish data. The main contribution of this study is that a positive relationship between the number of returned ELVs and the size of the premium was established. The results indicate that an increased premium would result in an increased number of returned ELVs. This implies that the efficiency of the EU directive could be increased if combined with an incentive system. Copyright Springer Japan 2008

Suggested Citation

  • K. Forslind, 2008. "The effect of a premium in the Swedish car scrapping scheme: an econometric study," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 9(1), pages 43-55, March.
    • Handle: RePEc:spr:envpol:v:9:y:2008:i:1:p:43-55
    DOI: 10.1007/BF03353974
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    References listed on IDEAS

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    1. Sandström, F. Mikael, 2003. "Car Age, Taxation, Scrappage Premiums and the ELV Directive," Working Paper Series 591, Research Institute of Industrial Economics.
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    3. Granger, C W J, 1969. "Investigating Causal Relations by Econometric Models and Cross-Spectral Methods," Econometrica, Econometric Society, vol. 37(3), pages 424-438, July.
    4. Engle, Robert F, 1982. "Autoregressive Conditional Heteroscedasticity with Estimates of the Variance of United Kingdom Inflation," Econometrica, Econometric Society, vol. 50(4), pages 987-1007, July.
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