The Impact of Environmental Fraud on the Used Car Market: Evidence from Dieselgate*
Itai Ater, Nir S. Yoseph
Abstract
This study explores the effects of Volkswagen’s 2015 emissions scandal (‘Dieselgate’) on the used car market in Israel. Using a difference‐in‐differences research design and administrative and proprietary data, we find that after Dieselgate the number of transactions involving VW‐manipulated cars fell by 18%, and the resale price of these cars fell by 6%. The drop in the number of transactions was concentrated among private sellers. We discuss alternative explanations and suggest that lower willingness‐to‐pay and adverse selection following Dieselgate could explain our findings.
Topics & Concepts
FellAdverse selectionBusinessSignificant differenceAdvertisingEconomicsMarketingMonetary economicsActuarial scienceStatisticsMathematicsPaleontologyBiologyEnergy, Environment, and Transportation PoliciesConsumer Market Behavior and PricingRegulation and Compliance Studies