The vehicle value externality

Gernot Sieg and Berthold U. Wigger

Economics Letters, 2025, vol. 247, issue C

Abstract: This paper introduces the vehicle value externality as a previously unacknowledged cost of car traffic. Unlike established externalities such as emissions or congestion, the vehicle value externality arises from the impact of vehicle value on accident damages. By developing a model linking insurance premiums to this externality and applying it to German car traffic data, we estimate the annual aggregate cost at 10 billion euros in 2021.

Keywords: Vehicle value; Accident damages; Insurance premiums (search for similar items in EconPapers)
JEL-codes: H23 R41 R48 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:247:y:2025:i:c:s0165176525000370

DOI: 10.1016/j.econlet.2025.112200

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