What is the argument for keeping your old car instead of trading it in for a new more efficient one?



  1. 0 Votes

    This can be explained through a very simple economic phenomenon in which people are resistant to invest in new technologies when they can continue to use the older ones at a cheap rate. The main capital costs needed for automobiles are in the sunken costs needed to first purchase the car. For instance, even if you have an old crappy car with terrible gas mileage, it is still economically cheaper to continue to drive it a ‘x’ dollars per year. Meanwhile, if driving a new, more efficient car would cost ‘x/2’, it would be cheaper to maintain a newer car, but you still have to pay the thousands of dollars needed to invest in the new technology. This is the same reason it is hard to get a dirty coal and oil burning society like ours to switch to renewable sources, because it is cheaper to continue using the older, dirtier and cheaper technology.

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