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An Economic Analysis of the Junk Automobile Problem.
NTIS: PB 224 650 :168 pages
The generation of stripped automobile hulks and scrapped automobiles is price inelastic. As a result, it is extremely difficult for the price mechanism to automatically achieve an equilibrium that will prevent the accumulation of excessive automobile wrecker inventories and vehicle abandonment by the last owners of scrapped cars. The new shredder processing technology and the new portable flattener technology have altered the structure of the junk automobile recycling system. The shredder technology has increased the demand for processed automobile scrap. This increased demand is reflected in higher prices paid for hulks by scrap processors. The portable flattener has reduced the transportation cost of shipping hulks to processors. The two new technologies have eliminated, at least potentially, the net cost of shipping stripped hulks so frequently incurred by wreckers in the past. The elimination of this cost eliminates the economic incentive for excessive wrecker inventories. Unfortunately, the incentive for last owners to abandon their cars does not appear to have been eliminated by the new technologies. The last owner of an automobile with no spare parts value is still likely to incur a cost by delivering his automobile to the recycling system. Although a subsidy payment is probably unnecessary to reduce excessive wrecker inventories, such a payment might be one solution to the problem of automobile abandonment.
IH; Information Circular;
NTIS Accession No.
NTIS: PB 224 650
Page last reviewed: September 2, 2020
Content source: National Institute for Occupational Safety and Health Education and Information Division