Behind the Mist of Corruption: A Case for Reconsidering Smog Checks
Cristine von Dessauer
Tesis, Magíster en Economía, IE-PUC, 2019
Abstract: Private vehicle emissions are an important source of local air pollution and indirect influencers on the health and welfare of citizens around the world. In this paper, I evaluate two policies that impose limits on car use, in terms of efficiency and associated welfare gains under different setting characteristics. In particular, I compare driving regulations that classify cars by their emissions through smog checks with their vintage-specific counterpart. Specifically, I analyze the degree to which the finer classification of cars obtained from a rule that differentiates them according to their pollution rate is compromised in presence of corruption. I use a model of the car market and Chilean vehicle fleet data to quantify the extent of manipulation in smog check stations and analyze its effects on both the efficiency and effectiveness of this regulation. I conclude that there is no unique rule that labels one of the two policies as the dominant strategy for every context. That is to say, an emission-specific policy seems highly adequate in places either where corruption is unusual or where the car fleet is composed of vehicles with sufficiently heterogeneous emissions. In any other case, a vintage-specific regulation might be the convenient alternative.