Rationing Can Backfire: The "Day without a Car" in Mexico City
A ban restricting each car from driving on a specified weekday is found to have increased total driving in Mexico City. Because of the ban, cars effectively represent "driving permits," and some households have bought an additional car and increased their driving. Greater use of old cars, congestion effects, and increased weekend driving may also have contributed to the disappointing results. The ban has high welfare costs and does not deliver the intended benefits of reduced driving--quite the contrary. The experience provides an interesting lesson in applied welfare economics. Theory indicates that this is a costly way of reducing traffic and pollution. But the findings that the strategy is counterproductive could be made only with applied quantitative analysis. Copyright 1997 by Oxford University Press.
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Volume (Year): 11 (1997)
Issue (Month): 3 (September)
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- Eskeland, Gunnar S, 1994. "A Presumptive Pigovian Tax: Complementing Regulation to Mimic an Emissions Fee," World Bank Economic Review, World Bank Group, vol. 8(3), pages 373-94, September.
- Berndt, Ernst R. & Botero, German, 1985. "Energy demand in the transportation sector of Mexico," Journal of Development Economics, Elsevier, vol. 17(3), pages 219-238, April.
- George A. Akerlof, 1970. "The Market for "Lemons": Quality Uncertainty and the Market Mechanism," The Quarterly Journal of Economics, Oxford University Press, vol. 84(3), pages 488-500.
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