[go: up one dir, main page]
More Web Proxy on the site http://driver.im/
IDEAS home Printed from https://ideas.repec.org/a/eee/transa/v181y2024ics0965856424000600.html
   My bibliography  Save this article

Shifting towards luxury cars: The price and environmental effects of Beijing’s vehicle lottery system and an alternative policy

Author

Listed:
  • Zhou, Fan
  • Yang, Ziying
  • Wu, Di
  • Zheng, Zuduo
Abstract
This paper investigates changes in the composition of vehicle fleets after Beijing implemented a vehicle lottery system (VLS) in 2011 that randomly allocates a quota of license plates to lottery participants. Using the car registration data, we examine the consumption response at the beginning of the restriction. Our analysis reveals that VLS effectively eliminated over one million additional car registrations in two years, however it also increased purchases of cars that are heavier, have larger engines, and are less fuel-efficient. We highlight that the change was associated with a greater reduction in the retail price of luxury cars compared with economy cars post-VLS implementation. Through a difference-in-differences (DID) analysis, we show that the average retail price in Beijing dropped by an additional 2 percent (about $0.4k) for economy cars and 5.8 percent (around $4.3k) for luxury cars, compared to cities without VLS. This price change increased the attractiveness of luxury cars relatively to economy cars. Furthermore, we build a structural model to estimate the consumer demand on vehicles as well as to simulate and compare other potential policies. Given the drawback of VLS that partially offsets the policy goal of emission elimination, we propose a market-based policy to save fuel consumption while achieving the same target of controlling vehicle growth as VLS.

Suggested Citation

  • Zhou, Fan & Yang, Ziying & Wu, Di & Zheng, Zuduo, 2024. "Shifting towards luxury cars: The price and environmental effects of Beijing’s vehicle lottery system and an alternative policy," Transportation Research Part A: Policy and Practice, Elsevier, vol. 181(C).
    • Handle: RePEc:eee:transa:v:181:y:2024:i:c:s0965856424000600
    DOI: 10.1016/j.tra.2024.104012
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0965856424000600
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.tra.2024.104012?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Sotirios Thanos & Michael White, 2014. "Expectation Adjustment in the Housing Market: Insights from the Scottish Auction System," Housing Studies, Taylor & Francis Journals, vol. 29(3), pages 339-361, April.
    2. Lucas W. Davis, 2008. "The Effect of Driving Restrictions on Air Quality in Mexico City," Journal of Political Economy, University of Chicago Press, vol. 116(1), pages 38-81, February.
    3. Jenn, Alan & Azevedo, Inês & Michalek, Jeremy Joseph, 2019. "Alternative-Fuel-Vehicle Policy Interactions Increase U.S. Greenhouse Gas Emissions," OSF Preprints n69tp, Center for Open Science.
    4. Winston, Clifford & Yan, Jia, 2021. "Vehicle size choice and automobile externalities: A dynamic analysis," Journal of Econometrics, Elsevier, vol. 222(1), pages 196-218.
    5. Chu, Sing-Fat & Koh, Winston T. H. & Tse, Yiu Kuen, 2004. "Expectations formation and forecasting of vehicle demand: an empirical study of the vehicle quota auctions in Singapore," Transportation Research Part A: Policy and Practice, Elsevier, vol. 38(5), pages 367-381, June.
    6. Damian Clarke & Kathya Tapia-Schythe, 2021. "Implementing the panel event study," Stata Journal, StataCorp LP, vol. 21(4), pages 853-884, December.
    7. Ortúzar, Juan de Dios & Bascuñán, Raúl & Rizzi, Luis Ignacio & Salata, Andrés, 2021. "Assessing the potential acceptability of road pricing in Santiago," Transportation Research Part A: Policy and Practice, Elsevier, vol. 144(C), pages 153-169.
    8. Evans, Mary F. & Vossler, Christian A. & Flores, Nicholas E., 2009. "Hybrid allocation mechanisms for publicly provided goods," Journal of Public Economics, Elsevier, vol. 93(1-2), pages 311-325, February.
    9. Börjesson, Maria & Kristoffersson, Ida, 2018. "The Swedish congestion charges: Ten years on," Transportation Research Part A: Policy and Practice, Elsevier, vol. 107(C), pages 35-51.
    10. Mulalic, Ismir & Rouwendal, Jan, 2020. "Does improving public transport decrease car ownership? Evidence from a residential sorting model for the Copenhagen metropolitan area," Regional Science and Urban Economics, Elsevier, vol. 83(C).
    11. Antonio M. Bento & Lawrence H. Goulder & Mark R. Jacobsen & Roger H. von Haefen, 2009. "Distributional and Efficiency Impacts of Increased US Gasoline Taxes," American Economic Review, American Economic Association, vol. 99(3), pages 667-699, June.
    12. Junji Xiao & Xiaolan Zhou & Wei‐Min Hu, 2017. "Welfare Analysis Of The Vehicle Quota System In China," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 58, pages 617-650, May.
    13. Yoder, Jonathan K. & Ohler, Adrienne M. & Chouinard, Hayley H., 2014. "What floats your boat? Preference revelation from lotteries over complex goods," Journal of Environmental Economics and Management, Elsevier, vol. 67(3), pages 412-430.
    14. Wang, Xize & Rodríguez, Daniel A. & Mahendra, Anjali, 2021. "Support for market-based and command-and-control congestion relief policies in Latin American cities: Effects of mobility, environmental health, and city-level factors," Transportation Research Part A: Policy and Practice, Elsevier, vol. 146(C), pages 91-108.
    15. Junji Xiao & Xiaolan Zhou & Wei‐Min Hu, 2017. "Welfare Analysis Of The Vehicle Quota System In China," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 58(2), pages 617-650, May.
    16. Chen, Xiaojie & Zhao, Jinhua, 2013. "Bidding to drive: Car license auction policy in Shanghai and its public acceptance," Transport Policy, Elsevier, vol. 27(C), pages 39-52.
    17. Shanjun Li & Christopher Timmins & Roger H. von Haefen, 2009. "How Do Gasoline Prices Affect Fleet Fuel Economy?," American Economic Journal: Economic Policy, American Economic Association, vol. 1(2), pages 113-137, August.
    18. Nolan, Anne, 2010. "A dynamic analysis of household car ownership," Transportation Research Part A: Policy and Practice, Elsevier, vol. 44(6), pages 446-455, July.
    19. Céline Bonnet & Pierre Dubois, 2010. "Inference on vertical contracts between manufacturers and retailers allowing for nonlinear pricing and resale price maintenance," RAND Journal of Economics, RAND Corporation, vol. 41(1), pages 139-164, March.
    20. Adam Copeland & Wendy Dunn & George Hall, 2011. "Inventories and the automobile market," RAND Journal of Economics, RAND Corporation, vol. 42(1), pages 121-149, March.
    21. Song, Siqi & Diao, Mi & Feng, Chen-Chieh, 2021. "Effects of pricing and infrastructure on car ownership: A pseudo-panel-based dynamic model," Transportation Research Part A: Policy and Practice, Elsevier, vol. 152(C), pages 115-126.
    22. Ian W. H. Parry & Kenneth A. Small, 2005. "Does Britain or the United States Have the Right Gasoline Tax?," American Economic Review, American Economic Association, vol. 95(4), pages 1276-1289, September.
    23. Zheng, Yunhan & Moody, Joanna & Wang, Shenhao & Zhao, Jinhua, 2021. "Measuring policy leakage of Beijing’s car ownership restriction," Transportation Research Part A: Policy and Practice, Elsevier, vol. 148(C), pages 223-236.
    24. Austin, David & Dinan, Terry, 2005. "Clearing the air: The costs and consequences of higher CAFE standards and increased gasoline taxes," Journal of Environmental Economics and Management, Elsevier, vol. 50(3), pages 562-582, November.
    25. Diao, Mi, 2019. "Towards sustainable urban transport in Singapore: Policy instruments and mobility trends," Transport Policy, Elsevier, vol. 81(C), pages 320-330.
    26. Viard, V. Brian & Fu, Shihe, 2015. "The effect of Beijing's driving restrictions on pollution and economic activity," Journal of Public Economics, Elsevier, vol. 125(C), pages 98-115.
    27. Alberto Abadie, 2005. "Semiparametric Difference-in-Differences Estimators," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 72(1), pages 1-19.
    28. Arie Beresteanu & Shanjun Li, 2011. "Gasoline Prices, Government Support, And The Demand For Hybrid Vehicles In The United States," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 52(1), pages 161-182, February.
    29. Don Fullerton & Li Gan, 2005. "Cost-Effective Policies to Reduce Vehicle Emissions," American Economic Review, American Economic Association, vol. 95(2), pages 300-304, May.
    30. Liu, Antung A. & Linn, Joshua & Qin, Ping & Yang, Jun, 2018. "Vehicle ownership restrictions and fertility in Beijing," Journal of Development Economics, Elsevier, vol. 135(C), pages 85-96.
    31. Marianne Bertrand & Esther Duflo & Sendhil Mullainathan, 2004. "How Much Should We Trust Differences-In-Differences Estimates?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 119(1), pages 249-275.
    32. Dargay, Joyce M, 2001. "The effect of income on car ownership: evidence of asymmetry," Transportation Research Part A: Policy and Practice, Elsevier, vol. 35(9), pages 807-821, November.
    33. Sommervoll, Dag Einar, 2020. "Jump bids in real estate auctions," Journal of Housing Economics, Elsevier, vol. 49(C).
    34. Benjamin Leard, 2022. "Estimating Consumer Substitution between New and Used Passenger Vehicles," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 9(1), pages 27-49.
    35. Damian Clarke & Kathya Tapia-Schythe, 2021. "Implementing the panel event study," Stata Journal, StataCorp LP, vol. 21(4), pages 853-884, December.
    36. Yang, Hongtai & Zhai, Guocong & Liu, Xiaohan & Yang, Linchuan & Liu, Yugang & Yuan, Quan, 2022. "Determinants of city-level private car ownership: Effect of vehicle regulation policies and the relative price," Transport Policy, Elsevier, vol. 115(C), pages 40-48.
    37. Yang, Jun & Liu, Antung A. & Qin, Ping & Linn, Joshua, 2020. "The effect of vehicle ownership restrictions on travel behavior: Evidence from the Beijing license plate lottery," Journal of Environmental Economics and Management, Elsevier, vol. 99(C).
    38. Suwei Feng & Qiang Li, 2018. "Evaluating the car ownership control policy in Shanghai: a structural vector auto-regression approach," Transportation, Springer, vol. 45(1), pages 205-232, January.
    39. Qian, Lixian & Grisolía, Jose M. & Soopramanien, Didier, 2019. "The impact of service and government-policy attributes on consumer preferences for electric vehicles in China," Transportation Research Part A: Policy and Practice, Elsevier, vol. 122(C), pages 70-84.
    40. West, Sarah E., 2004. "Distributional effects of alternative vehicle pollution control policies," Journal of Public Economics, Elsevier, vol. 88(3-4), pages 735-757, March.
    41. {O}ystein Daljord & Guillaume Pouliot & Junji Xiao & Mandy Hu, 2021. "The Black Market for Beijing License Plates," Papers 2105.00517, arXiv.org.
    42. Hao, Han & Wang, Hewu & Ouyang, Minggao, 2011. "Comparison of policies on vehicle ownership and use between Beijing and Shanghai and their impacts on fuel consumption by passenger vehicles," Energy Policy, Elsevier, vol. 39(2), pages 1016-1021, February.
    43. Junji Xiao & Heng Ju, 2014. "Market Equilibrium and the Environmental Effects of Tax Adjustments in China's Automobile Industry," The Review of Economics and Statistics, MIT Press, vol. 96(2), pages 306-317, May.
    44. Shanjun Li, 2018. "Better Lucky Than Rich? Welfare Analysis of Automobile Licence Allocations in Beijing and Shanghai," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 85(4), pages 2389-2428.
    45. Amil Petrin, 2002. "Quantifying the Benefits of New Products: The Case of the Minivan," Journal of Political Economy, University of Chicago Press, vol. 110(4), pages 705-729, August.
    46. Eriksson, Louise & Garvill, Jörgen & Nordlund, Annika M., 2008. "Acceptability of single and combined transport policy measures: The importance of environmental and policy specific beliefs," Transportation Research Part A: Policy and Practice, Elsevier, vol. 42(8), pages 1117-1128, October.
    47. Zhou, Fan & Zheng, Zuduo & Whitehead, Jake & Perrons, Robert K. & Washington, Simon & Page, Lionel, 2020. "Examining the impact of car-sharing on private vehicle ownership," Transportation Research Part A: Policy and Practice, Elsevier, vol. 138(C), pages 322-341.
    48. Ziying Yang & Manping Tang, 2019. "Welfare Analysis of Government Subsidy Programs for Fuel-Efficient Vehicles and New Energy Vehicles in China," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 74(2), pages 911-937, October.
    49. Berry, Steven & Levinsohn, James & Pakes, Ariel, 1995. "Automobile Prices in Market Equilibrium," Econometrica, Econometric Society, vol. 63(4), pages 841-890, July.
    50. Pinelopi Koujianou Goldberg, 1998. "The Effects of the Corporate Average Fuel Efficiency Standards in the US," Journal of Industrial Economics, Wiley Blackwell, vol. 46(1), pages 1-33, March.
    51. Zhou, Fan & Zheng, Zuduo & Whitehead, Jake & Washington, Simon & Perrons, Robert K. & Page, Lionel, 2020. "Preference heterogeneity in mode choice for car-sharing and shared automated vehicles," Transportation Research Part A: Policy and Practice, Elsevier, vol. 132(C), pages 633-650.
    52. Li, Shengxiao (Alex) & Guan, Xiaodong & Wang, Donggen, 2022. "How do constrained car ownership and car use influence travel and life satisfaction?," Transportation Research Part A: Policy and Practice, Elsevier, vol. 155(C), pages 202-218.
    53. Wang, Kaili & Salehin, Mohammad Faizus & Nurul Habib, Khandker, 2021. "A discrete choice experiment on consumer’s willingness-to-pay for vehicle automation in the Greater Toronto Area," Transportation Research Part A: Policy and Practice, Elsevier, vol. 149(C), pages 12-30.
    54. Li, Zhi-Chun & Wu, Qiao-Yu & Yang, Hai, 2019. "A theory of auto ownership rationing," Transportation Research Part B: Methodological, Elsevier, vol. 127(C), pages 125-146.
    55. Wang, Shenhao & Zhao, Jinhua, 2017. "The distributional effects of lotteries and auctions—License plate regulations in Guangzhou," Transportation Research Part A: Policy and Practice, Elsevier, vol. 106(C), pages 473-483.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Tan, Jijun & Xiao, Junji & Zhou, Xiaolan, 2019. "Market equilibrium and welfare effects of a fuel tax in China: The impact of consumers' response through driving patterns," Journal of Environmental Economics and Management, Elsevier, vol. 93(C), pages 20-43.
    2. Liu, Yizao, 2010. "Gasoline Prices, Fuel Economy Efficiency And Automobile Replacement Dynamics," Working Paper series 148290, University of Connecticut, Charles J. Zwick Center for Food and Resource Policy.
    3. Junji Xiao & Xiaolan Zhou & Wei‐Min Hu, 2017. "Welfare Analysis Of The Vehicle Quota System In China," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 58(2), pages 617-650, May.
    4. Ji, Qing & Wang, Chunan & Fan, Ying, 2022. "Environmental and welfare effects of vehicle purchase tax: Evidence from China," Energy Economics, Elsevier, vol. 115(C).
    5. Li, Shanjun & Wang, Binglin & Zhou, Hui, 2024. "Decarbonizing passenger transportation in developing countries: Lessons and perspectives1," Regional Science and Urban Economics, Elsevier, vol. 107(C).
    6. Ziying Yang & Manping Tang, 2019. "Welfare Analysis of Government Subsidy Programs for Fuel-Efficient Vehicles and New Energy Vehicles in China," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 74(2), pages 911-937, October.
    7. Suchi Kapoor Malhotra & Howard White & Nina Ashley O. Dela Cruz & Ashrita Saran & John Eyers & Denny John & Ella Beveridge & Nina Blöndal, 2021. "Studies of the effectiveness of transport sector interventions in low‐ and middle‐income countries: An evidence and gap map," Campbell Systematic Reviews, John Wiley & Sons, vol. 17(4), December.
    8. Banzhaf, H. Spencer & Kasim, M. Taha, 2019. "Fuel consumption and gasoline prices: The role of assortative matching between households and automobiles," Journal of Environmental Economics and Management, Elsevier, vol. 95(C), pages 1-25.
    9. Shanjun Li & Joshua Linn & Erich Muehlegger, 2014. "Gasoline Taxes and Consumer Behavior," American Economic Journal: Economic Policy, American Economic Association, vol. 6(4), pages 302-342, November.
    10. Lawrence Goulder, 2007. "Distributional and Efficiency Impacts of Increased U.S. Gasoline Taxes," Discussion Papers 07-009, Stanford Institute for Economic Policy Research.
    11. Yu, De-Ping & Li, Zhi-Chun, 2023. "Income distribution, implementation sequence, and equity in auto ownership rationing," Transportation Research Part B: Methodological, Elsevier, vol. 173(C), pages 59-89.
    12. Antonio M. Bento & Lawrence H. Goulder & Mark R. Jacobsen & Roger H. von Haefen, 2009. "Distributional and Efficiency Impacts of Increased US Gasoline Taxes," American Economic Review, American Economic Association, vol. 99(3), pages 667-699, June.
    13. Tscharaktschiew, Stefan, 2014. "Shedding light on the appropriateness of the (high) gasoline tax level in Germany," Economics of Transportation, Elsevier, vol. 3(3), pages 189-210.
    14. Fu, Yifan & Zhong, Shiquan & Ling, Shuai & He, Zhengbing, 2024. "Closing the loophole of vehicle ownership restriction: The impact of non-local vehicle restriction on new vehicle registrations and air pollution," Transportation Research Part A: Policy and Practice, Elsevier, vol. 185(C).
    15. Shihe Fu & V. Brian Viard, 2022. "A mayors perspective on tackling air pollution," Chapters, in: Charles K.Y. Leung (ed.), Handbook of Real Estate and Macroeconomics, chapter 16, pages 413-437, Edward Elgar Publishing.
    16. Li, Zhi-Chun & Wu, Qiao-Yu & Yang, Hai, 2019. "A theory of auto ownership rationing," Transportation Research Part B: Methodological, Elsevier, vol. 127(C), pages 125-146.
    17. Li, Shanjun & Liu, Yanyan & Zhang, Junjie, 2011. "Lose some, save some: Obesity, automobile demand, and gasoline consumption," Journal of Environmental Economics and Management, Elsevier, vol. 61(1), pages 52-66, January.
    18. Zheng, Yunhan & Moody, Joanna & Wang, Shenhao & Zhao, Jinhua, 2021. "Measuring policy leakage of Beijing’s car ownership restriction," Transportation Research Part A: Policy and Practice, Elsevier, vol. 148(C), pages 223-236.
    19. Zhi-Chun Li Author-Name : Wen-Jing Liu Author-Name : André de Palma, "undated". "Spatial heterogeneity in vehicle license plate lottery rationing," THEMA Working Papers 2024-11, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
    20. Xiao, Junji & Ju, Heng, 2011. "The impacts of air-pollution motivated automobile consumption tax adjustments of China," MPRA Paper 27743, University Library of Munich, Germany.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:transa:v:181:y:2024:i:c:s0965856424000600. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/547/description#description .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.