International Trade in Used Vehicles: The Environmental Consequences of NAFTA

Lucas Davis and Matthew Kahn

No 584, Working Papers from Research Seminar in International Economics, University of Michigan

Abstract: Previous studies of trade and the environment overwhelmingly focus on how trade affects where goods are produced. However, trade also affects where goods are consumed. In this paper we describe a model of trade with durable goods and non-chomothetic preferences. In autarky, used goods are relatively inexpensive in high-income countries and free trade causes these goods to be exported to low-income countries. We then evaluate the environmental consequences of this pattern of trade using evidence from the North American Free Trade Agreement. Since trade restrictions were eliminated in 2005, over 2.5 million used cars have been exported from the United States to Mexico. Using a unique, vehicle-level dataset, we find that traded vehicles are dirtier than the stock of vehicles in the United States and cleaner than the stock in Mexico, so trade leads average vehicle emissions to decrease in both countries. Total greenhouse gas emissions increase, primarily because trade gives new life to vehicles that otherwise would have been scrapped.

Keywords: trade; environment; NAFTA; consequences (search for similar items in EconPapers)
Pages: 44 pages
Date: 2009-01
New Economics Papers: this item is included in nep-ene, nep-env and nep-int
References: Add references at CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www.fordschool.umich.edu/rsie/workingpapers/Papers576-600/r584.pdf

Related works:
Journal Article: International Trade in Used Vehicles: The Environmental Consequences of NAFTA (2010)
Working Paper: International Trade in Used Vehicles: The Environmental Consequences of NAFTA (2009)
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:mie:wpaper:584

Access Statistics for this paper

More papers in Working Papers from Research Seminar in International Economics, University of Michigan Contact information at EDIRC.
Bibliographic data for series maintained by FSPP Webmaster (fspp-webmaster@umich.edu).