Command and control or market-based instruments? Public support for policies to address vehicular pollution in Beijing and New Delhi

Abstract

Environmental protection efforts commonly make use of two types of government interventions - command and control policies (C&C) and market-based instruments (MBIs). While MBIs are favored for their economic efficiency, visible prices on pollution may generate political backlash. We examine whether citizens are more likely to support policies that tend to obfuscate policy costs (C&C), as opposed to MBIs, which impose visible costs. Using conjoint experiments in Beijing and New Delhi, we examine support for ‘policy bundles’, including both C&C policies and MBIs, aimed at limiting air pollution from vehicles. In both cities, increasing fuel taxes (a MBI) reduces policy support. However, pledging revenue usage from fuel taxes to subsidize electric cars or public transport eliminates this negative effect. Furthermore, individuals with a lower evaluation of their government respond more negatively to MBIs. MBIs may be economically efficient, but are politically difficult unless policy-makers can offset visible costs through additional measures.