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Vintage-Specific Driving Restrictions

Author

Listed:
  • Nano Barahona
  • Francisco A Gallego
  • Juan-Pablo Montero

Abstract

Local air pollution has led authorities in many cities around the world to impose limits on car use by means of driving restrictions or license-plate bans. By placing uniform restrictions on all cars, many of these programs have created incentives for drivers to buy additional, more polluting cars. We study vintage-specific restrictions, which place heavy limits on older, polluting vehicles and no limits on newer, cleaner ones. We use a novel model of the car market and results from Santiago’s 1992 program, the earliest program to use vintage-specific restrictions, to show that such restrictions should be designed to work exclusively through the extensive margin (type of car driven), never through the intensive margin (number of miles driven). If so, vintage restrictions can yield important welfare gains by moving the fleet composition toward cleaner cars, comparing well to alternative instruments such as scrappage subsidies and pollution-based registration fees.

Suggested Citation

  • Nano Barahona & Francisco A Gallego & Juan-Pablo Montero, 2020. "Vintage-Specific Driving Restrictions," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 87(4), pages 1646-1682.
    • Handle: RePEc:oup:restud:v:87:y:2020:i:4:p:1646-1682.
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    File URL: http://hdl.handle.net/10.1093/restud/rdz031
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    Keywords

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    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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