License Plate in China- a new private good

A few years before I was born(I was born in 2003), my parents purchased their first car. At that time cars were still scarce- you could rarely see privately owned cars on the street, mainly buses and bicycles. Undoubtedly, license plates to cars were like ketchup to fries: if you buy the fries, you get the ketchup. Who would have thought that 20 years later, car plates are even more scarce than cars, that even if you buy a car, you are not guaranteed to get a plate?

License plates used to be more like a public good-  it is non-rival and non-excludable. One person getting a plate doesn't limit others from getting one, and no one can exclude other people from getting a plate. Even though technically if a person specifies his plate numbers but this combination is already taken, he/she wouldn't be able to get that specific plate. But overall, plate falls into the category of public good rather than private goods. Ever since the lottery system was released, plates have become a private good-both rivalrous and excludable. Policies differ depending on the cities, but in general, it is hard to get a plate, even if you already have a car, and especially if you already own a plate.

However, an exception holds. To respond to the negative externalities, the acceptance rate to the lottery system is significantly higher if the car you buy is electric. Some cities have the policy that if you buy electric cars, you can automatically get a plate without participating in the lottery system. The logistics behind this policy seems to be straightforward-  gas-powered cars pose negative externalities on the society, such as pollution, but individual drivers don't bear the full cost of it. Therefore, the government is encouraging consumers to switch to a less polluting option.

My takeaway on this public policy is that, by shifting plates into being a private good, the government is trying to correct the negative externalities, and it is working at least to some extent. There's less pollution from what I can see. Also, I am glad that I still don't have a license so that I don't need to compete for this rivalrous and excludable good.