Does the increase of public transit fares deteriorate air quality in Beijing?

Since 2006, Beijing lowered its public transit fares as a way to improve air quality. However, Beijing increased public transportation fare prices from December 28, 2014, and commuters pay for the distance they traveled rather than a flat fare. This paper explores the effect of Beijing public transit fares increase on air quality. We collect daily data of air pollution and weather variables and use synthetic control method of Abadie and Gardeazabal (2003) to select control units. We then estimate a difference-in-differences model and assess the effect of the policy on air quality index (AQI). We find a 16.28% increase in air pollution in short run. However, we find no longer-run effect on air quality.