Does subsidy increase carpooling usage? The case of short-distance carpooling in France

Many initiatives have been introduced worldwide by governments and industries to promote carpooling usage. In France, some local authorities have introduced carpooling subsidy policies since 2019 to encourage traveling by carpooling. We estimate the effect of local carpooling subsidies on the usage of short-distance carpooling organized by platforms 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 the implementation of the carpooling subsidy increases the number of monthly short-distance carpool trips organized by platforms by around 5.5 trips per 1,000 inhabitants in the local authority area, and that this effect increases over time. Moreover, a 1-euro increase in carpooling subsidy improves the number of monthly carpool trips organized by platforms per 1,000 inhabitants by 3.9 trips and such an effect also increases with time. These average effects mask considerable heterogeneity, with subsidy increasing carpooling usage more in larger and higher-density local authority areas and the effect being negligible for local authority areas with the smallest size and density. Our results also suggest that carpooling subsidy effects do not differ with local authority area median income.