32 Pages Posted: 21 May 2014
Date Written: May 2014
Governments in developed countries have implemented various regulations to manage air pollutants from automobiles, such as emission standards and subsidies for low emission vehicles. Japan is a unique example of a country that has overcome the severe air pollution of nitrogen oxides (NOx) and particulate matter (PM) through the mandatory retirement of old, high emission vehicles in metropolitan areas. To date, however, it is not clear which policy instruments have been effective in mitigating the air pollution from automobiles. The purpose of this paper is to empirically examine the effectiveness of policy instruments in attaining cleaner air in Japanese metropolitan areas. Using data from 1990 to 2005, we estimate the concentration functions of NOx and PM using a spatial econometric model. We find that most regulations and subsidies decreased the concentration levels of both pollutants. Traditional emission standards were found to be more effective than other policy instruments. Vehicle replacement subsidies were more cost-effective than those for PM-removal equipment. Furthermore, the empirical results indicate that the effect of subsidies for vehicle replacement on one municipality’s air had spillover effects by improving the pollutant concentrations in the surrounding municipal areas.
Keywords: Air pollution, Automobile, Regulation, Subsidies and Spillover
JEL Classification: Q53, Q58, R48
Suggested Citation: Suggested Citation
Iwata, Kazuyuki and Arimura, Toshi H. and Shimane, Tetsuya, The Effectiveness of Vehicle Emission Control Policies: Evidence from Japanese Experience (May 2014). Tokyo Center for Economic Research (TCER) Paper No. E-77. Available at SSRN: https://ssrn.com/abstract=2438618