Wednesday, May 22, 2013

Chinese Cities Use Prices to Reduce Demand for Autos--and It Works!

Marketplace reports on Beijing subway expansion and wonders if an increase in transit supply can cure congestion and pollution. The answer is no. Specifically, an increase in transit supply will have limited effects as long as driving is relatively cheap. Zhao Jian explains:
Just five years ago, the Beijing subway system was 70 miles long. Today it’s nearly four times that. But economics professor Zhao Jian at Beijing’s Jiaotong University says it’s going to take more than hundreds of miles of subway lines to solve Beijing’s traffic problem.
"The key to alleviating traffic and pollution in Beijing is to raise the cost of owning and using cars," says Zhao. "As it stands, parking fees are very low and traffic tickets aren’t that expensive. This needs to change."
As a counter example, Shanghai has very different policies:
In Shanghai, on the other hand, a license plate typically costs as much as the car itself. And that’s meant Shanghai, which has a bigger, more affluent population than Beijing, has half as many cars and is often spared Beijing’s persistent toxic haze.
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