Measuring policy leakage of Beijing’s car ownership restriction

Abstract

In response to severe traffic congestion and air pollution, Beijing introduced a car ownership restriction policy to curb growth in the number of private cars in the city. However, Beijing residents can still purchase and register their cars in neighboring cities and this “leakage” may substantially reduce the policy’s effectiveness. Using city-level data collected from the CEIC China Premium Database, we aim to quantify the spill-over effect: the impact of Beijing’s policy on the growth of private car registrations in neighboring cities. We first deploy a synthetic control method to create a weighted combination of non-treated cities for each treated city. We then employ a difference-in-differences approach to estimate the policy leakage. Our models suggest that the policy resulted in additional 443,000 cars sold in the neighboring cities (within 500 km of Beijing) from 2011 to 2013, compared to if the policy had not been implemented. 35–40% of the car growth reduction stipulated by the policy simply spilled over to neighboring cities. The significance of the policy leakage necessitates positioning Beijing’s urban transportation in a broader context and executing regional collaboration.