Vehicle Quota System and Its Impact on the Chinese Auto Markets: A Tale of Two Cities
39 Pages Posted: 16 Jul 2013 Last revised: 21 Jul 2013
Date Written: July 21, 2013
This paper investigates the impact of the unique vehicle quota system of Shanghai, China, on two Chinese markets of passenger vehicles. The empirical findings suggest that conditional on purchase of the license quota, consumers intend to purchase high-end vehicles with high price since the customers who can afford the license quota are less price sensitive. Hence, this system puts the manufacturers producing low end cars at a disadvantage.
Keywords: Chinese auto industry, Vehicle quota system, counterfactual analysis, discrete choice model
JEL Classification: C25, H11, L16
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