RSS | Juan-Pablo Montero
Juan-Pablo Montero of Pontificia Universidad Católica de Chile will be the speaker for this seminar.
Abstract for Juan-Pablo’s paper: “Adopting a cleaner technology: The effect of driving restrictions on fleet turnover”
In an effort to reduce vehicle pollution and congestion, authorities in different cities have experimented with different forms of driving restrictions. The restrictions in Mexico-City and in Santiago-Chile, for example, ban the use of a car once a week based on the last digit of its license plate, unless the car is relatively new, in which case is exempt from the restriction. Evidence from Santiago’s program show that such an exemption can have a large effect on fleet turnover and on households no longer bypassing the restriction with a second high-emitting car. We develop a vertical-differentiation model to study how best to design these driving policies. Calibrating the model’s parameters using Santiago’s evidence, we find that well designed driving restrictions can come close to implement the first-best (i.e., achieve 80% of the first-best welfare gains).