Driving restriction boundary and housing prices

Abstract

This paper investigates the boundary effect of a nonlocal-license-plate-based driving restriction policy on the housing market of Shenzhen, China. Combining the difference-in-differences framework with the boundary discontinuity design, we find that the driving restriction policy on average led to a 6.36% increase in the housing price of the restricted zone. We also find that after the driving restriction boundary was removed and expanded, the observed increase in the housing price disparity across the initial boundary diminished. This paper presents the first empirical evidence on the heterogeneous effect of a driving restriction on housing prices across the driving restriction boundary.