Felipe Sepúlveda

Research

Publications

• Pricing congestion to increase traffic: The case of Bogotá (with Juan‑Pablo Montero and Leonardo J. Basso) Journal of the European Economic Association, forthcoming [Show/hide abstract] [MIT CEEPR Working Paper]

  In September of 2020, the city of Bogot´a introduced a significant market-based reform to its odd-even driving restriction, better known as Pico y Placa. Drivers now have the option to pay a daily fee to be exempted from the restriction. Despite the increase in traffic, we find substantial efficiency gains from the reform. An important fraction of these gains— around 40%—comes from simply abolishing the restriction (i.e., setting the daily fee equal to zero); the rest from setting a strictly positive fee. Interestingly, and after accounting for the increase in remote work relative to its pre-covid level, our model suggests that the existing exemption fee is nearly optimal. We also discuss distributional and air-quality impacts of the reform. Letting the exemption fee to vary with the vehicle’s value provides limited distributional alleviation, not nearly as much as using the fee collection to reduce public-transport fares. On the other hand, letting the daily fee to vary with the vehicle’s emission rate provides some pollution containment, but not enough to offset the increase in emissions from the reform.

• On the geography of vintage-specific restrictions (with Carlos Fardella, Nano Barahona, and Juan‑Pablo Montero) Resource and Energy Economics, 2023 [Show/hide abstract] [Published version]

  Persistent air-pollution problems have led authorities in many cities around the world to impose limits on car use by means of vintage-specific restrictions or low-emission zones. Any vintage restriction must establish not only the cars that face a restriction but also its geographic area of application. As a result of the restriction, a fraction of restricted cars are exported outside the restricted area. Because restricted cars become cheaper, emissions in the restricted area could increase if exported cars remain too close to it. The extent to which such emissions leakage can occur crucially depends on transaction costs in the car market. We study this possibility with a model of the car market that allows for transaction costs and data from Santiago’s 2017 vintage restriction. We fail to find emissions leakage, at least severe enough to undo the 2017 policy effects. Interestingly, transaction costs are shown to have a non-monotonic impact on emissions, and hence, on welfare.

• A practical approach for curbing congestion and air pollution: Driving restrictions with toll and vintage exemptions (with Juan‑Pablo Montero and Leonardo J. Basso) Transportation Research Part A: Policy and Practice, 2021 [Show/hide abstract] [Published version]

  Congestion and local air pollution continue to be a serious problem in many cities around the world, partly because of an increasing and ageing car fleet. Unfortunately, the use of pricing schemes for handling these externalities, such as congestion and pollution charges, still face much resistance. To cope with it, Carlos F. Daganzo advanced an ingenious hybrid scheme that supposedly leaves everybody better off: driving restrictions with toll exemptions. We extend Daganzo’s idea to include vintage exemptions in an effort to also control for the pollution externality. We then test for its Pareto-improving property using Santiago as a case study. We find the latter not to hold in that low-income drivers are strictly worse off: the gain from faster car travel in days of no restriction is not enough to compensate the loss from switching to public transport in days of restriction. To make all individuals better off, the entire toll collection ought to be recycled back into the public transport system, lowering its fares and improving its quality. If so, the most ambitious hybrid restriction format —a 5-day-a-week restriction with vintage thresholds during fall and winter— reports per-year net benefits of around 1.2 billion dollars (or 0.5% of the country’s GDP), 58% of which comes from lighter traffic and the remaining 42% from cleaner air.

Working papers

• Public transport policies after Covid-19 confinement (with Leonardo J. Basso and Hugo E. Silva) [Show/hide abstract] [SSRN Working Paper]

  Congestion and local air pollution continue to be a serious problem in many cities around the world, partly because of an increasing and ageing car fleet. Unfortunately, the use of pricing schemes for handling these externalities, such as congestion and pollution charges, still face much resistance. To cope with it, Carlos F. Daganzo advanced an ingenious hybrid scheme that supposedly leaves everybody better off: driving restrictions with toll exemptions. We extend Daganzo’s idea to include vintage exemptions in an effort to also control for the pollution externality. We then test for its Pareto-improving property using Santiago as a case study. We find the latter not to hold in that low-income drivers are strictly worse off: the gain from faster car travel in days of no restriction is not enough to compensate the loss from switching to public transport in days of restriction. To make all individuals better off, the entire toll collection ought to be recycled back into the public transport system, lowering its fares and improving its quality. If so, the most ambitious hybrid restriction format —a 5-day-a-week restriction with vintage thresholds during fall and winter— reports per-year net benefits of around 1.2 billion dollars (or 0.5% of the country’s GDP), 58% of which comes from lighter traffic and the remaining 42% from cleaner air.

Selected work in progress

• Equilibrium effects of homebuyer subsidies (with Joaquin Fuenzalida)
• The afterlife of affordable housing: Evidence from LIHTC expirations (with Pablo Valenzuela)

Teaching Assistant

University of British Columbia

Pontificia Universidad Católica de Chile

Contact

Personal Email: fnsepulveda@uc.cl

UBC Email: fasepu@student.ubc.ca

References