Good News Or Bad News? An Empirical Analysis Of License Quota Policy’s Impact On China’s Auto Market
Authors : Mingyuan Xu, Zhiqi Zhou, Junyi Luo
Nanjing Foreign Language School, Nanjing, Jiangsu, PRC
More and more Chinese households are willing and able to purchase their private automobiles. However, the continuous growth in auto ownership causes many problems, which makes municipalities adopt multiple policies to restrain car usage. One of these policies is the vehicle license quota, including license lottery and license auction. This paper attempts to provide a comprehensive analysis of quota policy’s influence on the auto market from both theoretical and empirical perspectives. We find that there exists a structural impact on auto sales that Chinese self-owned brands benefit from quota policy while joint and imported brands are hurt by it. This paper also explores the difference of impact between two popular quota policies of lottery and auction. A lower lottery rate boosts the market share of self-owned brands but undermines joint and imported brands. Higher auction prices have a similar influence except that it has no impact on imported brands. Besides quota policies, we also discuss the influences of other factors such as income and public transportation in the empirical analysis.