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The price of owning a car: an analysis of auction quota premium in Singapore

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  • Mark Hon
  • Soo-Keong Yong

Abstract

Faced with dilemmas parallel to countries besieged by road congestions and limited land resources, Singapore has chosen to adapt a Vehicle Quota System (VQS) whereby car owners are required to bid for a licence in an auction before their vehicles are allowed onto the road. In this study, the behaviour of VQS auction prices is examined using a structural time series approach. For outliers that are not observable from innovations, auxiliary residuals with dummy variables are used to supplement the analysis. In general, prices exhibit a fairly constant seasonal pattern. The inclusion of monthly VQS quotas released by the transport regulatory body and the national stock market index is not useful in explaining the observed price behaviour. Interestingly, a basic structural model with stochastic components seems to fit the data best.

Suggested Citation

  • Mark Hon & Soo-Keong Yong, 2004. "The price of owning a car: an analysis of auction quota premium in Singapore," Applied Economics, Taylor & Francis Journals, vol. 36(7), pages 739-751.
    • Handle: RePEc:taf:applec:v:36:y:2004:i:7:p:739-751
    DOI: 10.1080/0003684042000222115
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    References listed on IDEAS

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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.
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    3. Harvey, Andrew & Snyder, Ralph D., 1990. "Structural time series models in inventory control," International Journal of Forecasting, Elsevier, vol. 6(2), pages 187-198, July.
    4. Jurgen A. Doornik & Henrik Hansen, 2008. "An Omnibus Test for Univariate and Multivariate Normality," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 70(s1), pages 927-939, December.
    5. Harvey, Andrew & Scott, Andrew, 1994. "Seasonality in Dynamic Regression Models," Economic Journal, Royal Economic Society, vol. 104(427), pages 1324-1345, November.
    6. Harvey, Andrew C & Koopman, Siem Jan, 1992. "Diagnostic Checking of Unobserved-Components Time Series Models," Journal of Business & Economic Statistics, American Statistical Association, vol. 10(4), pages 377-389, October.
    7. Harvey, A. C., 1986. "The effects of seat belt legislation on British road casualities: A case study in structural modelling : A.C. Harvey and J. Durbing, Journal of the Royal Statistical Society, Series A 149 (1986) (in p," International Journal of Forecasting, Elsevier, vol. 2(4), pages 496-497.
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    Cited by:

    1. Sakiru Adebola SOLARIN, 2017. "The Stationarity of Consumption-Income Ratios: Nonlinear Evidence in ASEAN Countries," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(2), pages 109-123, June.
    2. Winston Koh & Roberto Mariano & Yiu Kuen Tse, 2007. "Open vs. sealed-bid auctions: testing for revenue equivalence under Singapore's vehicle quota system," Applied Economics, Taylor & Francis Journals, vol. 39(1), pages 125-134.
    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.

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