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Congestion Control and Vehicle Ownership Restriction: The Choice of an Optimal Quota Policy

  • Winston T.H. Koh

    ()

    (School of Economics and Social Sciences, Singapore Management University)

Singapore introduced a vehicle quota system (VQS) in 1990 as part of its overall policy to control urban congestion. While the VQS has reduced the annual growth rate of the vehicle population to about 3%, it has created uncertainty in the cost of vehicle ownership due to the fluctuations in license prices. The paper discusses three issues relating to the optimal design of a VQS: license transferability, subcategorization and the choice of an auction format. Our analysis shows that license transferability is not unambiguously desirable, sub-categorization is highly regressive, and an open auction format results in less aggressive bidding and lower license prices.

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Paper provided by Singapore Management University, School of Economics in its series Working Papers with number 03-2004.

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Length: 34 pages
Date of creation: Dec 2003
Date of revision:
Publication status: Published in SMU Economics and Statistics Working Paper Series
Handle: RePEc:siu:wpaper:03-2004
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  1. Phang, Sock-Yong & Wong, Wing-Keung & Chia, Ngee-Choon, 1996. "Singapore's experience with car quotas : Issues and policy processes," Transport Policy, Elsevier, vol. 3(4), pages 145-153, October.
  2. Phang, Sock-Yong, 1993. "Singapore's motor vehicle policy: Review of recent changes and a suggested alternative," Transportation Research Part A: Policy and Practice, Elsevier, vol. 27(4), pages 329-336, July.
  3. Willoughby, C., 2001. "Singapore's motorization policies 1960-2000," Transport Policy, Elsevier, vol. 8(2), pages 125-139, April.
  4. Ling Hui Tan, 2003. "Rationing Rules and Outcomes: The Experience of Singapore's Vehicle Quota System," IMF Staff Papers, Palgrave Macmillan, vol. 50(3), pages 5.
  5. William Vickrey, 1961. "Counterspeculation, Auctions, And Competitive Sealed Tenders," Journal of Finance, American Finance Association, vol. 16(1), pages 8-37, 03.
  6. 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.
  7. J. Riley & E. Maskin, 1981. "Optimal Auctions with Risk Averse Buyers," Working papers 311, Massachusetts Institute of Technology (MIT), Department of Economics.
  8. Riley, John G & Samuelson, William F, 1981. "Optimal Auctions," American Economic Review, American Economic Association, vol. 71(3), pages 381-92, June.
  9. Liu, Louie Nan & McDonald, John F., 1998. "Efficient Congestion Tolls in the Presence of Unpriced Congestion: A Peak and Off-Peak Simulation Model," Journal of Urban Economics, Elsevier, vol. 44(3), pages 352-366, November.
  10. Chin, Anthony & Smith, Peter, 1997. "Automobile ownership and government policy: The economics of Singapore's vehicle quota scheme," Transportation Research Part A: Policy and Practice, Elsevier, vol. 31(2), pages 129-140, March.
  11. Verhoef, Erik & Nijkamp, Peter & Rietveld, Piet, 1996. "Second-Best Congestion Pricing: The Case of an Untolled Alternative," Journal of Urban Economics, Elsevier, vol. 40(3), pages 279-302, November.
  12. Falvey, Rodney E, 1979. "The Composition of Trade within Import-restricted Product Categories," Journal of Political Economy, University of Chicago Press, vol. 87(5), pages 1105-14, October.
  13. McCarthy Patrick & Tay Richard, 1993. "Economic Efficiency vs Traffic Restraint: A Note on Singapore's Area License Scheme," Journal of Urban Economics, Elsevier, vol. 34(1), pages 96-100, July.
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