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Restricting Consumption Of Automobiles In Beijing

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  • Pages: 8
  • Word count: 1805
  • Category: Economics

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Research question:

“To what extent do the government policies in restricting consumption of automobiles affect the demand for automobiles in Beijing?” Method of approaching investigation: To make the determination of research, the investigation was undertaken through primary and secondary research during the process. Primary research has investigated the citizens who lived in Beijing to draw a survey diagram and clear the distribution for different choices. On Monday in Jan.21 2012, 100 people are chosen to do this questionnaire in shopping malls in Xi Dan in Beijing and in the Junjun Garden community. Ask them some non-price factors which affected demand for automobiles. To have a good statistic result, she interviewed with two mangers in Beijing Deiao 4s shop and BYD 4s shop to gain information of the model Audi A6 and BYD S6 With combination of consumers and sellers, it gives a wide data collection in conclusion. Secondary research included internet and read books. To read a number of newspapers with published news, when government made some polices about automobiles in 2011. Summary of conclusion:

With much data collections, it showed government restricting automobiles policies effected demand of automobiles largely. There are three main reasons to define the result. First, 31.7% people think that they don’t buy automobiles because of the restricting policies. Among all the non-price determinants, government policies stand for the most important poison. Second, it has been determined by the PED has been concluded into the inelastic which means given a change in price of automobiles will result proportionately smaller influence in demand of automobiles. This means automobiles price can’t influence lots on the demand. Third, expect government restricting policies, other non-price determinants took a smaller impact on demand of automobiles. Eventually, government restricting policies play crucial role to effect demand of automobiles. Word count(295)


With the rapid and significant increase in income, people would like to buy some cars to convenient for their life. People don’t need to take the subway or bus to go to work. It’s easier for them to go to work or travel. However, the traffic jam and air pollution became big problems, some people wouldn’t like to buy automobiles. In 2011, because of some problems, Beijing government took a number of measures, including the restriction policy on automobiles driving on weekdays in Beijing by the last digital of the plate number, and the limits on migrant resident automobile purchases (buying approvals are only given to people who have “Hukou” (registered permanent residence) in Beijing and migrants who have worked and made income tax payments in Beijing within no less than five years, and the “Yaohao” measure (lottery for plate number).Those policies affected the consumption of automobiles. The recent economic growth caused the resources using, oil became more and more expensive. From the two perspective, it’s hard to understand the influence of this government polices make a change for the demand for automobiles.

After policies published and the big traffic jam problem in Beijing, from my perspective, the demand of automobiles will have a large decrease and citizens will lose some confidence or expectation for the market of automobiles. Out of these observation and thinking as well as my interest in the issue, the research question “To what extent do the government policies in restricting consumption of automobiles affect the demand for automobiles in Beijing?” was created. I would like to find which can limit the buying from consumers. And whether and how the government polices affect the demand for automobiles in Beijing. Eventually, there are many other factors can influence the selling of automobiles. And it works an important role in the demand for automobiles or non-price factors have no work for consumers. It aims to explore whether and how the government policies restricting automobiles and whether the other factor is significant to affect demand for automobiles.

Introduction of government policies

Beijing’s policy of restricting motor vehicle usage was launched during the Beijing Submit of Sino-African Cooperation Forum in 2006 and has been kept in force since 2008 after the Beijing Olympic Games. “The immediate reason for implementing such a policy is to guarantee the performance of the Beijing Olympic Games, while the underlying cause is to relieve the growing traffic congestion of the city”[1].

From January 9 in 2011, weekday peak hour area limit line of traffic management measures the rotation of the last digital of plate number. It limit cars go to Beijing by seeing the last digital of plate number. “On Monday, they suspended last digital of plate number 4 and 9; on Tuesday, it suspended the last digital of plate number 5 and 0; on Wednesday suspended last digital of plate number and suspended the last digital of plate number 2 and 7; On Thursday and Friday, suspended the last digital of plate number 3 and 8”. [2] Legal holidays are not limited to the line. Limited numbers for the five rings to the outer rings is not limited number.

Understanding of the Beijing Municipal Government, they concern about the Beijing traffic jam and some other problem. Therefore, they believe that
they should use some policies to address environmental and traffic pressure, “they should first focus on total control. To the end of 2010, the Beijing new car license issuance amount will likely be controlled at the 100,000 / year, this data only equivalent to less than 2007 Beijing increments of 1/4 of a new car.”[3]

In the specific implementation, Beijing will not allow the introduction of private car license fees and auction policy, but they can make the policy called “Yaohao” which means lottery to obtain the plate number.Yahao must have some element. If your family has a car, you have no chance to yaohao. During this process, you can’t give up. Each year a total of 100,000, the monthly issuance amount allocated by a certain percentage, by doing Yaohao, they can get plate number. If the limit-issued license plate policy is actually implemented, the Beijing automobile market and the impact of traffic environment will be far-reaching.

Introduction of two 4s car shops

The first one is shop in Chang ping in Beijing to sell domestic cars (the main brand is BYD). I interviewed with Mr. Lu to receive some data information. BYD is a simple brand in China and the price of this kind automobiles is around 150,000.Before government published the restricting cars policies in 2011, the statistic showed they sell around 53,435 cars in 2010. After government published the restricting cars policies, the manger said they lost many consumers, less and less people went to choose their automobiles.

So in 2012, the selling went down to around 35,323 cars. The another shop is the 4S shop that sell Audi automobiles (Germany brand) in Chao Yang in Beijing. I interviewed with Mr. Zhu to receive some data information. Audi oversees worldwide operations from its headquarters in Ingolstadt, Bavaria, Germany. Audi-branded vehicles are produced in seven production facilities worldwide. It belongs to the high price automobiles and the price of Audi cars is over 30,000. However, after the Beijing government took restricting policies, the outstanding achievement has been decrease, as the same situation as the domestic brand of BYD. Differently, the sales volume decrease a little slower that the number is from 32,596 cars in 2010 to 24,433 cars in 2012.

| |price in 2010(RMB) |Sales volumes in
|Sales volumes in |Difference of sales | | | |2010(cars)(before government|2012(cars)(after |volumes (cars) | | | |published restricting |government published | | | | |policies ) |restricting policies ) | | |BYDS6(domestic cars) |106,700 |53,435 |35,323 |-18,112 | |AudiA6(foreign cars) |446,000 |32,596 |24,433 |-8,163 |


My research question is “to what extent do the government policies in restricting consumption of automobiles affect the demand for automobiles”. The sales volumes depend on two parts of price factors or non-price factors. First, to see the price factor, two different levels of brands are been interviewed in the automobiles market. The mangers in two shops gave me the data of their outstanding achievement to see their different selling quantity in the same year to observe the condition if the price factor is a significant point for people to buy automobiles. Furthermore, the information will be useful for the analysis of non-price determinants of demand. Second, from the non-price factor side, to research the further investigation, preparation include designed a survey questionnaire for people who lived in Beijing.

I took those surveys in the big shopping mall and some communities to try to question different level revenue people. The questionnaire includes the substitutes and complements component, such as if oil price increase will make a big change for their desire to buy automobiles. As I thought the main non-price factors that I planned it into the questionnaire to provide me complete this research program. This questionnaire was written by 100 people in different ages. It’s necessary to note that non-price factors are essentially, some people may not react their real state to tell me subjectively. This will be a big limitation for me to survey and it will be related to the analysis of data collection. For deeper and further research, I read some newspaper about government restricting policies to know more and then safari the internet to read more information.

Data collection and the analysis
By investigating and understand the economic knowledge. There are two main parts to affect the One is price factor and the other is non price factor. Price determinant of demand:

“Demand means the quantity of a good or service that consumers are willing and able to purchase at a given price in a given time period”[4]. “The Law of Demand states that as the price of a product falls, the quantity demanded of the product will usually increase, ceteris paribus.”[5] When price change, it will cause a movement along the existing demand curve.

The quantity of automobiles demanded decrease as the price rise. This curve shows the relationship between the price of automobiles. “Supply is the quantity of a good or service that producers are willing and able to produce at a given price in a given time period”.[6] “Equilibrium: a market is considered to be in equilibrium if there is no tendency for change. This will be the case if quantity demanded per period equals quantity supplied”.

“In the case of demand of demand and supply, this will be a change in one of the determinants of demand and supply”[7]. With the any change of non-price determinants of demand or supply, it will lead the curve shift to the right or left to adjust the market to a new equilibrium. For example, when income increases, there is an increase in the demand to lead shift to the right.

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