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The Effect of Transport Policies on Car Use: Theory and Evidence from Latin American Cities

  • Francisco Gallego

    ()

    (Instituto de Economía. Pontificia Universidad Católica de Chile.)

  • Juan-Pablo Montero

    ()

    (Instituto de Economía. Pontificia Universidad Católica de Chile.)

  • Christian Salas

In an effort to reduce air pollution and congestion, Latin American cities have experimented with different policies to persuade drivers to give up their cars in favor of public transport. Two notable examples are the driving restriction program introduced in Mexico-City in November of 1989 –Hoy-No-Circula (HNC)– and the public transport reform carried out in Santiago in February of 2007 –Transantiago (TS). We develop a simple model of car use and ownership, and show that policies that may appear effective in the short run can be highly detrimental in the long run, i.e., after households have adjusted their stock of vehicles. Based on hourly concentration records of carbon monoxide, which comes primarily from vehicles exhaust, we find that household’s responses to both HNC and TS have been remarkably similar and consistent with the above: an expected short-run response followed by a rapid (before 11 months) increase in the stock of vehicles.

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Paper provided by Instituto de Economia. Pontificia Universidad Católica de Chile. in its series Documentos de Trabajo with number 407.

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Date of creation: 2011
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Handle: RePEc:ioe:doctra:407
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  1. Eskeland, Gunnar S. & Feyzioglu, Tarhan, 1995. "Rationing can backfire : the day without a car in Mexico City," Policy Research Working Paper Series 1554, The World Bank.
  2. Gilles Duranton & Matthew A. Turner, 2009. "The Fundamental Law of Road Congestion: Evidence from US Cities," SERC Discussion Papers 0030, Spatial Economics Research Centre, LSE.
  3. de Grange, Louis & Troncoso, Rodrigo, 2011. "Impacts of vehicle restrictions on urban transport flows: The case of Santiago, Chile," Transport Policy, Elsevier, vol. 18(6), pages 862-869, November.
  4. Chah, Eun Young & Ramey, Valerie A & Starr, Ross M, 1995. "Liquidity Constraints and Intertemporal Consumer Optimization: Theory and Evidence from Durable Goods," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 27(1), pages 272-87, February.
  5. Don Fullerton & Li Gan, 2005. "Cost-Effective Policies to Reduce Vehicle Emissions," American Economic Review, American Economic Association, vol. 95(2), pages 300-304, May.
  6. Caffera, Marcelo, 2011. "The use of economic instruments for pollution control in Latin America: lessons for future policy design," Environment and Development Economics, Cambridge University Press, vol. 16(03), pages 247-273, June.
  7. Ricardo Lagos, 2003. "An Analysis of the Market for Taxicab Rides in New York City," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 44(2), pages 423-434, 05.
  8. McAfee, R Preston & McMillan, John & Whinston, Michael D, 1989. "Multiproduct Monopoly, Commodity Bundling, and Correlation of Values," The Quarterly Journal of Economics, MIT Press, vol. 104(2), pages 371-83, May.
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  10. Lucas W. Davis, 2008. "The Effect of Driving Restrictions on Air Quality in Mexico City," Journal of Political Economy, University of Chicago Press, vol. 116(1), pages 38-81, 02.
  11. Guido Imbens & Karthik Kalyanaraman, 2009. "Optimal Bandwidth Choice for the Regression Discontinuity Estimator," NBER Working Papers 14726, National Bureau of Economic Research, Inc.
  12. John Vickers & Mark Armstrong, 2006. "Competitive Nonlinear Pricing and Bundling," Economics Series Working Papers 281, University of Oxford, Department of Economics.
  13. Francisco Gallego & Felipe Morandé & Raimundo Soto, 2001. "El Ahorro y el Consumo de Bienes Durables Frente al Ciclo Económico en Chile: ¿Consumismo, Frugalidad, Racionalidad?," Working Papers Central Bank of Chile 96, Central Bank of Chile.
  14. Caballero, Ricardo J, 1990. "Expenditure on Durable Goods: A Case for Slow Adjustment," The Quarterly Journal of Economics, MIT Press, vol. 105(3), pages 727-43, August.
  15. Jonathan Leape, 2006. "The London Congestion Charge," Journal of Economic Perspectives, American Economic Association, vol. 20(4), pages 157-176, Fall.
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