The Beijing Vehicle Quota System Lottery and Changes in Vehicle Consumption Patterns

We examine the outcomes of Beijing's Vehicle Quota System. Using a difference-in-differences approach and a synthetic control approach we find that features of the design resulted in ＂unfair＂ allocations. Hidden participation fees, availability of outside options, and the supply and demand shifts resulting from implementation of the system resulted in wealthier households crowding out poorer ones. After the implementation of the policy, there was a shift in the consumption pattern of vehicles towards high-end cars, and the share vehicle ownership increased in Beijing's wealthier districts. The conclusion is that Beijing's Vehicle Quota System did not result in outcomes one would expect if the lottery was truly random.