Various countries have adopted incentive programs for automobile owners to trade in their old, fuel inefficient vehicles for more environmentally friendly models.  At the same time, these programs may shift consumption into the current year, when demand is depressed, and thereby help stimulate an economic recovery.  As with any policy initiative, however, there may be unexpected side effects.  In this case, we might wonder what would have been done with those vehicles that are being taken out of service.  Two authors at UCLA and Berkeley suggest that trade in used cars will decline.  If these used cars previously were exported to Mexico, and if they were more fuel efficient that those being driven in Mexico, then US emissions may decline, but Mexican emissions may rise.  When the relevant externality is global, both effects need to be considered.