Does subsidy increase the use of carpooling via platforms? The case of short-distance carpooling in France

Many initiatives have been introduced worldwide by governments and industry to promote the use of carpooling. In France, some local authorities have introduced carpooling subsidy policies since 2019 to encourage carpooling trips. We estimate the effect of local carpooling subsidies on the usage of platform-organized short-distance carpooling, using a difference-in-differences design that exploits variation across French “Communautés de Communes” (i.e. local authorities) in both the amount of subsidy and the timing of subsidy policy start. We find that, on average, the introduction of the subsidy increases the number of monthly short-distance carpool trips organized by platforms by approximately 5.2 trips per 1,000 inhabitants in the area covered by the local authority, and this effect increases over time. The study of the effect of the subsidy amount shows that a €1 increase in the carpooling subsidy improves the number of monthly carpool trips organized by platforms by 3.9 trips per 1,000 inhabitants. These average effects mask considerable heterogeneity, with subsidy increasing carpooling use more in larger and more densely populated local authority areas, and the effect being negligible in the smallest and least densely populated local authority areas. We also use survey results to investigate opportunity, windfall and environmental effects of the policy. It indicates our estimates of subsidy effects should be reduced by one-third or one-half to obtain the net new carpoolers effect, as between half and a third of the new carpoolers joining the platforms after the introduction of the subsidy are due to the opportunity effect. We find that carpooling subsidy amount needed to save one ton of CO2 is roughly between €1000 and €1300.