IDEAS home Printed from https://ideas.repec.org/a/kap/transp/v41y2014i5p1119-1134.html
   My bibliography  Save this article

Mitigating supply and price volatilities in Singapore’s vehicle quota system

Author

Listed:
  • Singfat Chu

Abstract

Traffic congestion in city-state Singapore is managed by vehicle ownership restraint complemented with usage charges in bottleneck zones. A certificate of entitlement (COE) obtained from auctions held twice a month is required to register any new vehicle. As Singapore sticks to a target vehicle population, the quota of COEs availed in the auctions hinges critically on the number of vehicles deregistered before the 10 years expiry of the COE. The paper demonstrates that vehicle deregistrations are negatively influenced by the prevailing COE prices. This engenders boom and bust cycles in the COE quotas and thereby spurs price volatility. It is also shown that below an empirically-derived breakpoint quota, COE prices surge and they may also correlate negatively with bidding competition. To avoid such undesirable situations, a proposal is made to allocate the breakpoint quota as a minimum by borrowing from future quotas. This will help smooth quota and price volatilities while adhering to medium-term vehicle population targets. The practicality of the proposal is discussed against various alternatives. Copyright Springer Science+Business Media New York 2014

Suggested Citation

  • Singfat Chu, 2014. "Mitigating supply and price volatilities in Singapore’s vehicle quota system," Transportation, Springer, vol. 41(5), pages 1119-1134, September.
    • Handle: RePEc:kap:transp:v:41:y:2014:i:5:p:1119-1134
    DOI: 10.1007/s11116-014-9542-5
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1007/s11116-014-9542-5
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1007/s11116-014-9542-5?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Börjesson, Maria & Eliasson, Jonas & Hugosson, Muriel B. & Brundell-Freij, Karin, 2012. "The Stockholm congestion charges—5 years on. Effects, acceptability and lessons learnt," Transport Policy, Elsevier, vol. 20(C), pages 1-12.
    2. Moshe Givoni, 2012. "Re-assessing the Results of the London Congestion Charging Scheme," Urban Studies, Urban Studies Journal Limited, vol. 49(5), pages 1089-1105, April.
    3. Börjesson, Maria & Eliasson, Jonas & Hugosson, Muriel & Brundell-Freij, Karin, 2012. "The Stockholm congestion charges – five years on. Effects, acceptability and lessons learnt," Working papers in Transport Economics 2012:3, CTS - Centre for Transport Studies Stockholm (KTH and VTI).
    4. Rassenti, Stephen J & Smith, Vernon L & Wilson, Bart J, 2003. "Discriminatory Price Auctions in Electricity Markets: Low Volatility at the Expense of High Price Levels," Journal of Regulatory Economics, Springer, vol. 23(2), pages 109-123, March.
    5. Brian C. Murray & Richard G. Newell & William A. Pizer, 2009. "Balancing Cost and Emissions Certainty: An Allowance Reserve for Cap-and-Trade," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 3(1), pages 84-103, Winter.
    6. Wang, Rui, 2010. "Shaping urban transport policies in China: Will copying foreign policies work?," Transport Policy, Elsevier, vol. 17(3), pages 147-152, May.
    7. Shobe, William & Holt, Charles & Huetteman, Thaddeus, 2014. "Elements of emission market design: An experimental analysis of California's market for greenhouse gas allowances," Journal of Economic Behavior & Organization, Elsevier, vol. 107(PA), pages 402-420.
    8. Rotaris, Lucia & Danielis, Romeo & Marcucci, Edoardo & Massiani, Jérôme, 2010. "The urban road pricing scheme to curb pollution in Milan, Italy: Description, impacts and preliminary cost-benefit analysis assessment," Transportation Research Part A: Policy and Practice, Elsevier, vol. 44(5), pages 359-375, June.
    9. Lawrence M. Ausubel & Peter Cramton & Marek Pycia & Marzena Rostek & Marek Weretka, 2014. "Demand Reduction and Inefficiency in Multi-Unit Auctions," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 81(4), pages 1366-1400.
    10. Milgrom, Paul R & Weber, Robert J, 1982. "A Theory of Auctions and Competitive Bidding," Econometrica, Econometric Society, vol. 50(5), pages 1089-1122, September.
    11. Chu, Singfat, 2012. "Allocation flexibility and price efficiency within Singapore’s Vehicle Quota System," Transportation Research Part A: Policy and Practice, Elsevier, vol. 46(10), pages 1541-1550.
    12. Song, Fu-Tie & Zhou, Wei-Xing, 2010. "Analyzing the prices of the most expensive sheet iron all over the world: Modeling, prediction and regime change," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 389(17), pages 3538-3545.
    13. Boyce, John R, 1994. "Allocation of Goods by Lottery," Economic Inquiry, Western Economic Association International, vol. 32(3), pages 457-476, July.
    14. Willoughby, C., 2001. "Singapore's motorization policies 1960-2000," Transport Policy, Elsevier, vol. 8(2), pages 125-139, April.
    15. 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.
    16. 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.
    17. 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.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Chu, Singfat, 2015. "Car restraint policies and mileage in Singapore," Transportation Research Part A: Policy and Practice, Elsevier, vol. 77(C), pages 404-412.
    2. Huang, Naqun & Li, Jing & Ross, Amanda, 2018. "The impact of the cost of car ownership on the house price gradient in Singapore," Regional Science and Urban Economics, Elsevier, vol. 68(C), pages 160-171.
    3. Singfat Chu, 2018. "Singapore’s Vehicle Quota System and its impact on motorcycles," Transportation, Springer, vol. 45(5), pages 1419-1432, September.
    4. Diao, Mi, 2019. "Towards sustainable urban transport in Singapore: Policy instruments and mobility trends," Transport Policy, Elsevier, vol. 81(C), pages 320-330.
    5. Suwei Feng & Qiang Li, 2018. "Evaluating the car ownership control policy in Shanghai: a structural vector auto-regression approach," Transportation, Springer, vol. 45(1), pages 205-232, January.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Chu, Singfat, 2015. "Car restraint policies and mileage in Singapore," Transportation Research Part A: Policy and Practice, Elsevier, vol. 77(C), pages 404-412.
    2. Chu, Singfat, 2012. "Allocation flexibility and price efficiency within Singapore’s Vehicle Quota System," Transportation Research Part A: Policy and Practice, Elsevier, vol. 46(10), pages 1541-1550.
    3. Suwei Feng & Qiang Li, 2018. "Evaluating the car ownership control policy in Shanghai: a structural vector auto-regression approach," Transportation, Springer, vol. 45(1), pages 205-232, January.
    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. Winston T.H. Koh, 2004. "Congestion Control and Vehicle Ownership Restriction: The Choice of an Optimal Quota Policy," Journal of Transport Economics and Policy, University of Bath, vol. 38(3), pages 371-402, September.
    6. Yang, Xiaofang & Jin, Wen & Jiang, Hai & Xie, Qianyan & Shen, Wei & Han, Weijian, 2017. "Car ownership policies in China: Preferences of residents and influence on the choice of electric cars," Transport Policy, Elsevier, vol. 58(C), pages 62-71.
    7. Diao, Mi, 2019. "Towards sustainable urban transport in Singapore: Policy instruments and mobility trends," Transport Policy, Elsevier, vol. 81(C), pages 320-330.
    8. Lana Krehic, 2022. "How do increases in electric vehicle use affect urban toll ring prices?," Public Choice, Springer, vol. 193(3), pages 187-209, December.
    9. Eliasson, Jonas, 2017. "Congestion pricing," MPRA Paper 88224, University Library of Munich, Germany.
    10. Cameron, I. & Lyons, T. J. & Kenworthy, J. R., 2004. "Trends in vehicle kilometres of travel in world cities, 1960-1990: underlying drivers and policy responses," Transport Policy, Elsevier, vol. 11(3), pages 287-298, July.
    11. Chu, Sing-Fat & Koh, Winston T. H. & Tse, Yiu Kuen, 2004. "Expectations formation and forecasting of vehicle demand: an empirical study of the vehicle quota auctions in Singapore," Transportation Research Part A: Policy and Practice, Elsevier, vol. 38(5), pages 367-381, June.
    12. Singfat Chu, 2018. "Singapore’s Vehicle Quota System and its impact on motorcycles," Transportation, Springer, vol. 45(5), pages 1419-1432, September.
    13. Growitsch, Christian & Müller, Gernot & Rammerstorfer, Margarethe & Weber, Christoph, 2007. "Determinanten der Preisentwicklung auf dem deutschen Minutenreservemarkt," WIK Discussion Papers 300, WIK Wissenschaftliches Institut für Infrastruktur und Kommunikationsdienste GmbH.
    14. Kaplan, Todd R. & Zamir, Shmuel, 2015. "Advances in Auctions," Handbook of Game Theory with Economic Applications,, Elsevier.
    15. Han, Sun Sheng, 2010. "Managing motorization in sustainable transport planning: the Singapore experience," Journal of Transport Geography, Elsevier, vol. 18(2), pages 314-321.
    16. Khezr, Peyman & MacKenzie, Ian A., 2018. "Permit market auctions with allowance reserves," International Journal of Industrial Organization, Elsevier, vol. 61(C), pages 283-306.
    17. Santos, Georgina & Li, Wai Wing & Koh, Winston T.H, 2004. "9. Transport Policies In Singapore," Research in Transportation Economics, Elsevier, vol. 9(1), pages 209-235, January.
    18. Friesen, Lana & Gangadharan, Lata & Khezr, Peyman & MacKenzie, Ian A., 2022. "Mind your Ps and Qs! Variable allowance supply in the US Regional Greenhouse Gas Initiative," Journal of Environmental Economics and Management, Elsevier, vol. 112(C).
    19. Juan Pedro Muñoz Miguel & Ana Elizabeth García Sipols & Clara Simón de Blas & Francisca Anguita Rodríguez, 2021. "A Model to Evaluate the Effect of Urban Road Pricing on Traffic Speed and Congestion in Madrid City Center and Its Surrounding," Sustainability, MDPI, vol. 13(15), pages 1-23, July.
    20. Andersson, David & Nässén, Jonas, 2016. "The Gothenburg congestion charge scheme: A pre–post analysis of commuting behavior and travel satisfaction," Journal of Transport Geography, Elsevier, vol. 52(C), pages 82-89.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:transp:v:41:y:2014:i:5:p:1119-1134. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.