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The effect of information on market activity; evidence from vehicle recalls


Please use this identifier to cite or link to this item: http://hdl.handle.net/2077/66651

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Title: The effect of information on market activity; evidence from vehicle recalls
Authors: van den Bijgaart, Inge
Cerruti, Davide
Issue Date: Oct-2020
Extent: 51
Publication type: report
Organization: Department of Economics, University of Gothenburg
Series/Report no.: Working Papers in Economics
792
Keywords: Vehicles
recalls
adverse selection
sorting
information
Abstract: We evaluate the effect of vehicle recalls on vehicle transactions in the second-hand market. Using a rich dataset of Dutch vehicle registrations, we exploit the quasi-experimental variation in recalls across nearly-identical cars. We find strong heterogeneities across market segment: vehicles with a lower (higher) list price or some (zero) defects experience an increase (decrease) in transactions after a recall. Based on our theoretical model, this suggests that recalls increase sorting in ... more
ISSN: 1403-2465
Description: JEL Classification: D12, L15, L62
URI: http://hdl.handle.net/2077/66651
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