Impact of Command-and-Control Regulation on the Electrification of Car Sharing Market

• In Event: Double-Edged Swords? Trying to Decrease Carbon from Transportation

Abstract

Transportation electrification is crucial for reducing pollution and climate change. While market incentives drive new energy vehicle adoption, the effectiveness of China's unique command-and-control regulations in the car-sharing market is less studied. We implement a quasi-natural experiment by using the city-level administrative mandates, which establish new energy vehicles as ride-hailing registration prerequisites. Employing a staggered DID approach and an instrumental variables approach, we quantify these policies' causal effects on rental vehicle sales. The results show that command-and-control regulation can significantly promote the electrification transition in the car sharing market, leading to a 64.4% increase in the sales of new energy rental cars. It has a more pronounced effect in western regions, non-central cities, and resource-based cities. The policy works by expanding charging infrastructure, increasing brand variety, and promoting urban-rural equality. Its impact is stronger in cities with high climate policy uncertainty, strong governmental environmental focus, and high innovation. Our results also show that this command-and-control regulation has a stronger boosting effect on pure electric rental cars and a dampening effect on other fuel-type new energy rental cars such as hybrids. It is worth noting that command-and-control regulations may generate negative externalities. While increasing the sales volume of new energy rental vehicles, they could simultaneously lower the overall quality of vehicles circulating in the market. Command-and-control regulations may also generate negative spatial spillover effects, reducing sales of new energy rental vehicles in surrounding cities. Our findings confirm the positive role and other multi-dimensional impact of command-and-control policy in car-sharing electrification and offer insights for transportation electrification policy design.

Authors

• Haowen Dong, Harbin Institute of Technology
  Presenting Author

• Jing Liang, Harbin Institute of Technology
  Non-Presenting Co-Author