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The effect of transport policies on car use: A bundling model with applications

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  • Gallego, Francisco
  • Montero, Juan-Pablo
  • Salas, Christian

Abstract

Borrowing from the bundling literature, the paper presents a novel model of vertical and horizontal differentiation applied to transport decisions: households differ in their preferences for transportation modes — cars vs public transport — and in the amount of travel. Using few observables, the model is then used to interpret and compute policy costs associated to the effects of two major transport policies: the driving restriction program introduced in Mexico-City in November of 1989 and the public transport reform carried out in Santiago-Chile in February of 2007. Both policies had the unintended impact of increasing the number of cars on the road; and their associated transport costs are estimated, respectively, to be about 5% and 9% of the value of the vehicle stock at the time of implementation.

Suggested Citation

  • Gallego, Francisco & Montero, Juan-Pablo & Salas, Christian, 2013. "The effect of transport policies on car use: A bundling model with applications," Energy Economics, Elsevier, vol. 40(S1), pages 85-97.
  • Handle: RePEc:eee:eneeco:v:40:y:2013:i:s1:p:s85-s97
    DOI: 10.1016/j.eneco.2013.09.018
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    References listed on IDEAS

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    1. 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.
    2. Onursal, B. & Gautam, S.P., 1997. "Vehicular Air Pollution: Experiences from Seven Latin American Urban Centers," Papers 373, World Bank - Technical Papers.
    3. Eskeland, Gunnar S & Feyzioglu, Tarhan, 1997. "Rationing Can Backfire: The "Day without a Car" in Mexico City," World Bank Economic Review, World Bank Group, vol. 11(3), pages 383-408, September.
    4. Ian W. H. Parry & Kenneth A. Small, 2009. "Should Urban Transit Subsidies Be Reduced?," American Economic Review, American Economic Association, vol. 99(3), pages 700-724, June.
    5. Mark Armstrong & John Vickers, 2010. "Competitive Non-linear Pricing and Bundling," Review of Economic Studies, Oxford University Press, vol. 77(1), pages 30-60.
    6. Eberly, Janice C, 1994. "Adjustment of Consumers' Durables Stocks: Evidence from Automobile Purchases," Journal of Political Economy, University of Chicago Press, vol. 102(3), pages 403-436, June.
    7. de Grange, Louis & Troncoso, Rodrigo, 2011. "Impacts of vehicle restrictions on urban transport flows: The case of Santiago, Chile," Transport Policy, Elsevier, vol. 18(6), pages 862-869, November.
    8. Gallego, Francisco & Montero, Juan-Pablo & Salas, Christian, 2013. "The effect of transport policies on car use: Evidence from Latin American cities," Journal of Public Economics, Elsevier, vol. 107(C), pages 47-62.
    9. Caffera, Marcelo, 2011. "The use of economic instruments for pollution control in Latin America: lessons for future policy design," Environment and Development Economics, Cambridge University Press, vol. 16(03), pages 247-273, June.
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    Citations

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    Cited by:

    1. Christian Hilber & Charles Palmer, 2014. "Urban development and air pollution: Evidence from a global panel of cities," GRI Working Papers 175, Grantham Research Institute on Climate Change and the Environment.
    2. Paul Carrillo & Andrea López & Arun Malik, 2016. "Pollution or Crime: The Effect of Driving Restrictions on Criminal Activity," IDB Publications (Working Papers) 7731, Inter-American Development Bank.
    3. Catherine Hausman & David S. Rapson, 2017. "Regression Discontinuity in Time: Considerations for Empirical Applications," NBER Working Papers 23602, National Bureau of Economic Research, Inc.
    4. Shengyuan Zhang & Jimin Zhao, 2016. "Low-Carbon Futures for Shenzhen’s Urban Passenger Transport System," HKUST IEMS Working Paper Series 2016-33, HKUST Institute for Emerging Market Studies, revised Jun 2016.
    5. Gallego, Francisco & Montero, Juan-Pablo & Salas, Christian, 2013. "The effect of transport policies on car use: Evidence from Latin American cities," Journal of Public Economics, Elsevier, vol. 107(C), pages 47-62.
    6. Zhang, Wei & Lin Lawell, C.-Y. Cynthia & Umanskaya, Victoria I., 2017. "The effects of license plate-based driving restrictions on air quality: Theory and empirical evidence," Journal of Environmental Economics and Management, Elsevier, vol. 82(C), pages 181-220.
    7. Liu, Yunxia & Hong, Zaisheng & Liu, Yong, 2016. "Do driving restriction policies effectively motivate commuters to use public transportation?," Energy Policy, Elsevier, vol. 90(C), pages 253-261.
    8. Diao, Qinghua & Sun, Wei & Yuan, Xinmei & Li, Lili & Zheng, Zhi, 2016. "Life-cycle private-cost-based competitiveness analysis of electric vehicles in China considering the intangible cost of traffic policies," Applied Energy, Elsevier, vol. 178(C), pages 567-578.
    9. Hua Ma & Guizhen He, 2016. "Effects of the Post-Olympics Driving Restrictions on Air Quality in Beijing," Sustainability, MDPI, Open Access Journal, vol. 8(9), pages 1-15, September.
    10. repec:eee:trapol:v:60:y:2017:i:c:p:119-130 is not listed on IDEAS

    More about this item

    Keywords

    Public transport; Driving restrictions; Pollution; Congestion;

    JEL classification:

    • R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Transportation: Demand, Supply, and Congestion; Travel Time; Safety and Accidents; Transportation Noise
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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