This dissertation consists of three essays studying the effects of environmental regulations and policies in the transportation sector in China. The first chapter studies the effectiveness, efficiency, and distributional effect of using trade restrictions on used vehicles to protect the local environment. Leveraging comprehensive data on the bilateral trade of vehicles across Chinese prefecture cities and the staggered rollout of import restrictions on used vehicles implemented by city governments from 2013 to 2015, this chapter shows empirical evidence that import restrictions reduce net imports of used vehicles, and cities’ import restrictions are strategic complements. With a multi-sector multi-region structural trade model, this study shows that unilaterally restricting imports of used vehicles leads to welfare trade-offs between economic losses vs. environmental benefits. Restricting heavy-polluting vehicles makes some cities better off, especially lower-income cities. However, decentralized restrictions are socially inefficient due to strategic interactions, and the effectiveness and efficiency of using import restrictions as an environmental instrument are limited compared to emission taxes. The second chapter, joint with Jie Bai, Danxia Xie, and Shanjun Li, explores the import restrictions on used vehicles in China from the perspective of local protectionism. Leveraging the universe of new and used vehicle registration/sales data and the staggered removal of the restriction across cities from 2016 to 2018, this analysis shows that the removal of restriction led to a sharp increase in the cross-city flow of used vehicles but had no significant impacts on local air quality in the short run. Interestingly, the new vehicle market points to a prisoner’s dilemma among city governments: a unilateral removal of the policy would reduce new vehicle sales in a city but increase new vehicle sales in other cities. The effect is stronger in cities with a large automobile industry. The findings highlight alternative motives behind local environmental regulations and the need for coordinated efforts at the national level. The third chapter, joint with Shanjun Li, Xianglei Zhu, Yiding Ma, and Fan Zhang, examines the effectiveness of various policy measures that underlie the rapid development of the EV market in China, based on detailed data on EV sales, local and central government incentive programs, and charging stations in 150 cities from 2015 to 2018. This research finds that consumer subsidies for vehicle purchases accounted for more than half of EV sales in China. Nevertheless, investments in charging infrastructure were much more cost-effective than consumer subsidies. An inexpensive policy that merely provided EVs with a distinctive, green license plate was strikingly effective. These findings demonstrate the varying efficacy of different policy instruments and highlight the critical role of the government in promoting clean technologies.