Estimating an Emissions Supply Function from Accelerated Vehicle Retirement Programs

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Abstract
Local authorities and industries seeking to reduce emissions and improve air quality have shown interest in programs that offer to purchase and retire old, high-polluting vehicles. We analyze the results from an experimental vehicle retirement program in Delaware, during which selected pre-1980 vehicle owners were offered $500 for their vehicles and surveyed about vehicle characteristics, value and use. With this unique data set we estimate the relationship between the owner's reservation price and the expected remaining life of the vehicle to derive a supply curve for emissions reductions, which predicts the emissions reductions as a function of the offer made to eligible vehicles in a scrappage program.

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