AN ECONOMIC-ANALYSIS OF SCRAPPAGE

This article examines the impact of policies aimed at encouraging the retirement of older, high-polluting vehicles, such as the ''cash for clunkers'' policy endorsed by President George Bush in 1992. The analysis assesses the likely benefits and costs of vehicle scrappage programs. I also address the interaction of a scrappage program with other ongoing policies, such as improved inspection and maintenance. Finally, the simulation for Los Angeles suggests plausible design values for a scrappage program.