The effect of information on market activity; evidence from vehicle recalls

Inge van den Bijgaart and Davide Cerruti ()

No 792, Working Papers in Economics from University of Gothenburg, Department of Economics

Abstract: We evaluate the effect of vehicle recalls on vehicle transactions in the second-hand market. Using a rich dataset of Dutch vehicle registrations, we exploit the quasi-experimental variation in recalls across nearly-identical cars. We find strong heterogeneities across market segment:vehicles with a lower (higher) list price or some (zero) defects experience an increase (decrease) in transactions after a recall. Based on our theoretical model, this suggests that recalls increase sorting in low-end markets, yet exacerbate adverse selection in high-end markets. Our results shed light on the effect of information arrival in markets subject to uncertainty and information asymmetries.

Keywords: Vehicles; recalls; adverse selection; sorting: information (search for similar items in EconPapers)
JEL-codes: D12 L15 L62 (search for similar items in EconPapers)
Pages: 51 pages
Date: 2020-10
New Economics Papers: this item is included in nep-tre
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://gupea.ub.gu.se/handle/2077/66651 Full text (text/html)

Related works:
Journal Article: The Effect of Information on Market Activity: Evidence from Vehicle Recalls (2024)
Working Paper: The Effect of Information on Market Activity; Evidence from Vehicle Recalls (2020)
Working Paper: The effect of information on market activity; evidence from vehicle recalls (2020)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hhs:gunwpe:0792

Ordering information: This working paper can be ordered from

Access Statistics for this paper

More papers in Working Papers in Economics from University of Gothenburg, Department of Economics Department of Economics, School of Business, Economics and Law, University of Gothenburg, Box 640, SE 405 30 GÖTEBORG, Sweden. Contact information at EDIRC.
Bibliographic data for series maintained by Jessica Oscarsson ().