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The Effect of Transport Policies on Car Use: A Bundling Model with Applications

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  • Francisco Gallego

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

  • Juan-Pablo Montero

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

  • Christian Salas

Abstract

In an effort to reduce pollution and congestion, Latin American cities have experimented with different policies to persuade drivers to give up their cars in favor of public transport. Borrowing from the bundling literature, the paper presents a novel model of vertical and horizontal differentiation applied to transport decisions: households differ in their preferences for transportation modes -cars vs public transport- and in the amount of travel. The model captures in a simple way a household's response to a policy shock, i.e., how to allocate existing car capacity, if any, to competing uses (peak vs off-peak hours) and how to adjust such capacity overtime. Using few observables, the model is then used to analyze the effects of two major transport policies: 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). The model's simulated effects are not only consistent with the econometric estimates in Gallego et al (2013) but also help understand the mechanisms that explain them.

Suggested Citation

  • Francisco Gallego & Juan-Pablo Montero & Christian Salas, 2013. "The Effect of Transport Policies on Car Use: A Bundling Model with Applications," Documentos de Trabajo 432, Instituto de Economia. Pontificia Universidad Católica de Chile..
    • Handle: RePEc:ioe:doctra:432
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    References listed on IDEAS

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    1. 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, February.
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    Cited by:

    1. Bofinger, Peter & Feld, Lars P. & Schmidt, Christoph M. & Schnabel, Isabel & Wieland, Volker, 2018. "Vor wichtigen wirtschaftspolitischen Weichenstellungen. Jahresgutachten 2018/19," Annual Economic Reports / Jahresgutachten, German Council of Economic Experts / Sachverständigenrat zur Begutachtung der gesamtwirtschaftlichen Entwicklung, volume 127, number 201819.
    2. Liu, Zhiyong & Li, Ruimin & Wang, Xiaokun(Cara) & Shang, Pan, 2018. "Effects of vehicle restriction policies: Analysis using license plate recognition data in Langfang, China," Transportation Research Part A: Policy and Practice, Elsevier, vol. 118(C), pages 89-103.
    3. Christian Hilber & Charles Palmer, 2014. "Urban development and air pollution: Evidence from a global panel of cities," GRI Working Papers 175, Grantham Research Institute on Climate Change and the Environment.
    4. Shengyuan Zhang & Jimin Zhao, 2016. "Low-Carbon Futures for Shenzhen’s Urban Passenger Transport System," HKUST IEMS Working Paper Series 2016-33, HKUST Institute for Emerging Market Studies, revised Jun 2016.
    5. Martin W. Adler & Federica Liberini & Antonio Russo & Jos N. van Ommeren, 2019. "The Congestion Relief Benefit of Public Transit: Evidence from Rome," CESifo Working Paper Series 7698, CESifo.
    6. Gallego, Francisco & Montero, Juan-Pablo & Salas, Christian, 2013. "The effect of transport policies on car use: Evidence from Latin American cities," Journal of Public Economics, Elsevier, vol. 107(C), pages 47-62.
    7. Liu, Zhiyong & Li, Ruimin & Wang, Xiaokun (Cara) & Shang, Pan, 2020. "Noncompliance behavior against vehicle restriction policy: A case study of Langfang, China," Transportation Research Part A: Policy and Practice, Elsevier, vol. 132(C), pages 1020-1033.
    8. Liu, Yunxia & Hong, Zaisheng & Liu, Yong, 2016. "Do driving restriction policies effectively motivate commuters to use public transportation?," Energy Policy, Elsevier, vol. 90(C), pages 253-261.
    9. Carrillo, Paul E. & Lopez-Luzuriaga, Andrea & Malik, Arun S., 2018. "Pollution or crime: The effect of driving restrictions on criminal activity," Journal of Public Economics, Elsevier, vol. 164(C), pages 50-69.
    10. Caplan, Arthur J. & Acharya, Ramjee, 2019. "Optimal vehicle use in the presence of episodic mobile-source air pollution," Resource and Energy Economics, Elsevier, vol. 57(C), pages 185-204.
    11. Francisco Gallego & Juan-Pablo Montero & Hernán Barahona, 2016. "Adopting a Cleaner Technology: The Effect of Driving Restrictions on Fleet Turnover," Documentos de Trabajo 469, Instituto de Economia. Pontificia Universidad Católica de Chile..
    12. Paulo Reis Mourao, 2018. "Smoking Gentlemen—How Formula One Has Controlled CO 2 Emissions," Sustainability, MDPI, Open Access Journal, vol. 10(6), pages 1-23, June.
    13. Rhiannon Jerch & Panle Jia Barwick & Shanjun Li & Jing Wu, 2020. "Road Rationing Policies and Housing Markets," DETU Working Papers 2004, Department of Economics, Temple University.
    14. Zhang, Bin & Chen, Haitao & Du, Zhanjie & Wang, Zhaohua, 2020. "Does license plate rule induce low-carbon choices in residents’ daily travels: Motivation and impacts," Renewable and Sustainable Energy Reviews, Elsevier, vol. 124(C).
    15. Hua Ma & Guizhen He, 2016. "Effects of the Post-Olympics Driving Restrictions on Air Quality in Beijing," Sustainability, MDPI, Open Access Journal, vol. 8(9), pages 1-15, September.
    16. Matthias Bäuml & Christian Kümpel, 2021. "Hospital responses to the refinement of reimbursements by treatment intensity in DRG systems," Health Economics, John Wiley & Sons, Ltd., vol. 30(3), pages 585-602, March.
    17. Catherine Hausman & David S. Rapson, 2018. "Regression Discontinuity in Time: Considerations for Empirical Applications," Annual Review of Resource Economics, Annual Reviews, vol. 10(1), pages 533-552, October.
    18. Nordfjærn, Trond & Lind, Hans Brende & Şimşekoğlu, Özlem & Jørgensen, Stig Halvard & Lund, Ingunn Olea & Rundmo, Torbjørn, 2019. "The role of social cognition in perceived thresholds for transport mode change," Transport Policy, Elsevier, vol. 83(C), pages 88-96.
    19. von der Goltz, Jan & Barnwal, Prabhat, 2019. "Mines: The local wealth and health effects of mineral mining in developing countries," Journal of Development Economics, Elsevier, vol. 139(C), pages 1-16.
    20. Zhang, Wei & Lin Lawell, C.-Y. Cynthia & Umanskaya, Victoria I., 2017. "The effects of license plate-based driving restrictions on air quality: Theory and empirical evidence," Journal of Environmental Economics and Management, Elsevier, vol. 82(C), pages 181-220.
    21. Diao, Qinghua & Sun, Wei & Yuan, Xinmei & Li, Lili & Zheng, Zhi, 2016. "Life-cycle private-cost-based competitiveness analysis of electric vehicles in China considering the intangible cost of traffic policies," Applied Energy, Elsevier, vol. 178(C), pages 567-578.
    22. Jorge A. Bonilla & Fernando Carriazo, 2018. "Assessing Social Experiments Using Apps: The Case of Car-Free Days in Bogotá," Documentos CEDE 016856, Universidad de los Andes - CEDE.
    23. Ramos, Raúl & Cantillo, Víctor & Arellana, Julián & Sarmiento, Iván, 2017. "From restricting the use of cars by license plate numbers to congestion charging: Analysis for Medellin, Colombia," Transport Policy, Elsevier, vol. 60(C), pages 119-130.
    24. Kheiravar, Khaled H, 2019. "Economic and Econometric Analyses of the World Petroleum Industry, Energy Subsidies, and Air Pollution," Institute of Transportation Studies, Working Paper Series qt3gj151w9, Institute of Transportation Studies, UC Davis.

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    More about this item

    Keywords

    public transport; driving restrictions; pollution; congestion;
    All these keywords.

    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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