Identifying Odometer Fraud: Evidence from the Used Car Market in the Czech Republic

Josef Montag

MPRA Paper from University Library of Munich, Germany

Abstract: This paper investigates the presence of odometer fraud in the used-car market in the Czech Republic using a unique dataset of 250,000 car-sale ads. Alternative identification techniques are also discussed. However, selection into the market as well as the practice of rounding odometer readings---possibly strategic yet innocent---render the standard statistical tests unusable. A modification of the last-digit test, which was previously used to detect fraud in election and accounting data, is therefore developed and employed. The results suggest that suspicious patterns are more prevalent in the segment of cars imported from abroad. I also show that this methodology can be used at the firm-level, which may be of interest to authorities and market participants.

Keywords: Used car market; odometer fraud; digit tests. (search for similar items in EconPapers)
JEL-codes: K42 R40 (search for similar items in EconPapers)
Date: 2015
New Economics Papers: this item is included in nep-tra and nep-tre
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:65182

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