Environmental Protection or Environmental Protectionism? Evidence from Tail Pipe Emission Standards in China

Abstract

Under the stated goal of improving air quality, many cities in China restricted the import of used vehicles from other cities based on tail pipe emission standards. Using detailed data on new and used vehicle registration, we examine the impact of the policy by leveraging the staggered removal of the restriction during 2016-2018. We find that restriction removal led to a sharp increase in cross-city flow of used vehicles but had no significant impact on local air quality. Unilateral removal of the restriction could reduce new vehicle sales in home cities, but universal removal would boost new vehicle sales nationwide.