This was created in partnership with Environment for Development .
This paper uses data from 2009 to 2014 to study the short- to medium-run effect of a driving restriction on transportation patterns in Beijing. The driving restriction specifies two numbers for each weekday so that cars with license plates ending in either of the numbers are banned from driving on that date. Because very few Chinese want to have their car licenses ending in 4, many more cars are driving on days when 4 is banned. Exploiting this variation, the analysis shows that the driving restriction significantly improves traffic conditions in the restricted period without worsening it in the unrestricted period. When cars are banned, bus and taxi ridership increases significantly, but very few drivers were motivated to take rail. With the implementation of the driving restriction policy, the improvement effect on the evening traffic conditions becomes stronger over the study period, which can be largely attributed to the car purchase quota and the more stringent punishment for violating the driving restriction, both of which started in 2011.