A simple economic analysis of vehicle quota premiums

Due to the scarcity of land in Singapore, the road infrastructure cannot grow rapidly enough to accommodate an unrestrained growth in vehicle population and traffic. Therefore, the government has instituted a host of vehicle ownership and usage restraint policies. One of the latest is the Vehicle Qu...

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Bibliographic Details
Published inSingapore management review Vol. 16; no. 1; p. 1
Main Author Tay, Richard
Format Journal Article
LanguageEnglish
Published Singapore Singapore Institute of Management 01.01.1994
Subjects
Automobiles
Impacts
Regulation
Sales quotas
Studies
Supply & demand
Traffic control
Transportation economics
Singapore
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Summary:Due to the scarcity of land in Singapore, the road infrastructure cannot grow rapidly enough to accommodate an unrestrained growth in vehicle population and traffic. Therefore, the government has instituted a host of vehicle ownership and usage restraint policies. One of the latest is the Vehicle Quota System introduced in May 1990. Since then the quota premium has increased dramatically, rousing renewed public debate with each tender exercise. An attempt is made to analyze the effect of the quota system on the car market from May 1990 to August 1992, using basic demand and supply analysis. Results drawn from auction theory provide some insight on the debate on the optimal form of auction for Certificates of Entitlement (COE). Experience with the change from transferable to non-transferable COEs suggests that any effect from an institutional change may be outweighed by the effect of increasing demand due to economic growth.
ISSN:0129-5977