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Car License Auction: Theory and Experimental Evidence

Author

Listed:
  • Lijia Tan

    (The Wang Yanan Institute for Studies in Economics and MOE Key Laboratory in Econometrics, Xiamen University)

  • Lijia Wei

    (School of Economics and Management, Wuhan University)

Abstract

In Singapore and many Chinese cities, tens of thousands of people participate in car license auctions each month. In a car license auction, many car licenses are sold but each participant can only bid for one license. We examine the theoretical properties of three auction formats: Shanghai auction, Guangzhou auction, and Singapore auction. Our main results are that (1) No equilibrium of the Shanghai auction can guarantee an efficient allocation, (2) the Singapore auction allocates objects efficiently if and only if a unique market clearing price does not exist, and (3) the Guangzhou auction is efficient if bidders are symmetric. The experimental evidence confirms our theoretical prediction. Our experiment also shows that the learning effects over time are quite different among these auction formats.

Suggested Citation

  • Lijia Tan & Lijia Wei, 2014. "Car License Auction: Theory and Experimental Evidence," Working Papers 1401, Xiamen Unversity, The Wang Yanan Institute for Studies in Economics, Finance and Economics Experimental Laboratory, revised 02 Sep 2014.
  • Handle: RePEc:fee:wpaper:1401
    as

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    File URL: http://feel.xmu.edu.cn/RePEc/wpaper/car_license_auction.pdf
    File Function: 2014
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    References listed on IDEAS

    as
    1. Krishna, Vijay, 2009. "Auction Theory," Elsevier Monographs, Elsevier, edition 2, number 9780123745071, December.
    2. Chen, Yan & Onur, Kesten, 2013. "From Boston to Chinese parallel to deferred acceptance: Theory and experiments on a family of school choice mechanisms," Discussion Papers, Research Unit: Market Behavior SP II 2013-205, WZB Berlin Social Science Center.
    3. Singfat Chu, 2011. "Sealed v/s open bids for certificates of entitlement under the vehicle quota system in Singapore," Transportation, Springer, vol. 38(2), pages 215-226, March.
    4. Koh, Winston T. H., 2003. "Control of vehicle ownership and market competition: theory and Singapore's experience with the vehicle quota system," Transportation Research Part A: Policy and Practice, Elsevier, vol. 37(9), pages 749-770, November.
    5. Koh, Winston T. H. & Lee, David K. C., 1994. "The vehicle quota system in Singapore: An assessment," Transportation Research Part A: Policy and Practice, Elsevier, vol. 28(1), pages 31-47, January.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Auction; Car License; Laboratory Experiment;
    All these keywords.

    JEL classification:

    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact
    • D04 - Microeconomics - - General - - - Microeconomic Policy: Formulation; Implementation; Evaluation
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions

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