DETERMINANTS OF PARTICIPATION IN ACCELERATED VEHICLE-RETIREMENT PROGRAMS

Accelerated vehicle-retirement programs are currently being examined as one way to reduce hydrocarbon emissions. Forecasting participation rates in these programs is one of the major areas of uncertainty because the number of participants and their characteristics are likely to vary with the price offered to attract old cars. We present a theoretical model of the owner's car tenure and scrappage decision. Next, we develop and estimate an econometric model of participation in an old-vehicle scrap program using data from a recent program in the state of Delaware. We then predict participation rates at different possible offer prices.