Closing the loophole of vehicle ownership restriction: The impact of non-local vehicle restriction on new vehicle registrations and air pollution

Vehicle ownership restriction (VOR) is considered effective in reducing traffic congestion and air pollution. However, citizens manage to circumvent VOR by registering vehicles from other cities, undermining the effectiveness of VOR. To close the loophole, some cities introduced a non-local vehicle restriction (NLVR) policy with an announcement period prior to the official enforcement of NLVR. By taking Beijing, China as a case study, this paper quantifies the effectiveness of NLVR in patching VOR and explores citizens’ adaptive behavioral response during the announcement period. A propensity score matching with difference-in-differences (DID) method is first adopted to quantify the new vehicle registrations in neighboring cities of Beijing. Then, a regression control method based on Lasso and a DID approach are used to isolate the causal effect of NLVR on air pollution. Finally, we investigate the announcement effect of NLVR on new vehicle registrations and air pollution, respectively. Our results suggest that NLVR has its intended effect of closing the loophole in Beijing's previously-enacted VOR. Average monthly new vehicle registrations in neighboring cities of Beijing drops by 3.4% and NO₂ concentration in Beijing decreases by 5.59 μg/m³. During the announcement period, we observe a significant decrease in new vehicle registrations in neighboring cities, suggesting that potential buyers have refrained from purchasing new vehicles in anticipation of the forthcoming stringent NLVR. However, there is no notable decline observed in NO₂ concentration in Beijing. We recommend that policymakers should fully analyze the relationship between participants, foster regional cooperation on transport policies, and design a reasonable announcement period according to the policy's purposes.