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Adopting a Cleaner Technology: The Effect of Driving Restrictions on Fleet Turnover

Author

Listed:
  • Hernán Barahona
  • Francisco Gallego
  • Jeanne Juan-Pablo Montero

Abstract

Driving restrictions —limits on car use based on the last digit of a car’s license plate— are increasingly popular forms of pollution and congestion control, notwithstanding the literature has shown they typically result in more pollution by moving the fleet composition toward higher emitting vehicles. We study a design feature present in some restriction programs but much overlooked in the literature: that cleaner cars be exempted from the restriction. Based on evidence from Santiago- Chile’s 1992 program, we find this exemption feature to have a large impact on fleet composition toward cleaner vehicles. We also develop and calibrate for Santiago a vertical differentiation model of the car market to show that driving restrictions that make optimal use of these exemptions can be way more effective in the fight against local air pollution than alternative instruments such as scrappage subsidies and gasoline taxes.

Suggested Citation

  • Hernán Barahona & Francisco Gallego & Jeanne Juan-Pablo Montero, 2016. "Adopting a Cleaner Technology: The Effect of Driving Restrictions on Fleet Turnover," Working Papers ClioLab 24, EH Clio Lab. Instituto de Economía. Pontificia Universidad Católica de Chile.
    • Handle: RePEc:ioe:clabwp:24
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    References listed on IDEAS

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    JEL classification:

    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • M53 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Training

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