TY  - JOUR
AU  - Davis,Lucas W.
AU  - Kahn,Matthew E.
TI  - International Trade in Used Durable Goods: The Environmental Consequences of NAFTA
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 14565
PY  - 2008
Y2  - December 2008
UR  - http://www.nber.org/papers/w14565
L1  - http://www.nber.org/papers/w14565.pdf
N1  - Author contact info:
Lucas W. Davis
Haas School of Business
University of California
Berkeley, CA 94720-1900
E-Mail: ldavis@haas.berkeley.edu

Matthew E. Kahn
UCLA Institute of the Environment
Department of Economics
Department of Public Policy
Box 951496
La Kretz Hall, Suite 300
Los Angeles, CA 90095-1496
Tel: 310/794-4904
Fax: 310/825-9663
E-Mail: mkahn@ioe.ucla.edu
AB  - Previous studies of trade and the environment overwhelmingly focus on how trade affects where goods are produced. However, trade also affects where goods are consumed. In this paper we describe a model of trade with durable goods and non-homothetic preferences. In autarky, low-quality (used) goods are relatively inexpensive in high-income countries and free trade causes these goods to be exported to low-income countries. We then evaluate the environmental consequences of this pattern of trade using evidence from the North American Free Trade Agreement. Since trade restrictions were eliminated for used cars in 2005, over 2.5 million used cars have been exported from the United States to Mexico. Using a unique, vehicle-level dataset, we find that traded vehicles are dirtier than the stock of vehicles in the United States and cleaner than the stock in Mexico, so trade leads average vehicle emissions to decrease in both countries. Total greenhouse gas emissions increase, primarily because trade gives new life to vehicles that otherwise would have been scrapped.
ER  -