Effective or Efficient? Effects of Beijing's Vehicle Lottery System on Fleet Composition and Environment

Abstract

To control vehicle growth and air pollution, Beijing's municipal government imposed a vehicle lottery system in 2011, which randomly allocated a quota of licenses to potential buyers. This paper investigates the effect of this policy on fleet composition, fuel consumption, air pollution, and social welfare. Using car registration data, we estimate a random coefficient discrete choice model and conduct counterfactual analysis based on the estimated parameters. We find that the lottery reduced new passenger vehicle * We gratefully acknowledge the kind help and constructive comments of Professors