Clearing the Air: Restricting Vehicle Use or Improving Vehicle Emission Standards?

Driving restriction policy (DRP) has been utilized worldwide to improve air quality and traffic congestion. Typically, DRP restricts private vehicle use based on plate number (PDRP), because it’s simple and easy to enforce. As one of the nine Chinese cities with plate number DRP, Nanchang experienced an interesting change in its DRP design. Starting from July 1st 2013, the city traffic department imposed an additional restriction on vehicle use based on emission standard (EDRP). This particular time discontinuity in driving restriction enforcement enables us to evaluate both types of DRP and provide the empirical evidence on their relative effectiveness for public policy-makers. Our results raised concerns over non-price policies because behavioral responses can be so large that net policy benefits may be zero, or even negative.