This paper examines how a scrappage subsidy affects the lifetime of durable goods when secondhand markets are present. To this end, we propose a vintage model to analyze the replacement decision in an economy in which high and low income agents trade on a durable good. Thus, the existence of a...

In order to evaluate the performance of the Plan Prever (a scrapping scheme introduced by the Spanish government in 1997), we propose a model of car replacement. It is based in the recent literature on investment goods replacement and allows for a quantitative evaluation of the effects on car's...