Spatial heterogeneity in vehicle license plate lottery rationing

This paper studies vehicle license plate lottery rationing problem with spatial heterogeneity by using a two-area modeling framework. The equilibria of residential location and vehicle ownership choices of heterogeneous households with different values of time (VOTs) are first analyzed. A social welfare maximization model is then proposed for determining the optimal number of vehicle quotas and the optimal quota proportion allocated to central and suburban areas of the city. Two alternative lottery schemes, a city-based and an area-based scheme, are explored and compared. The results show significant spatial disparities in the behavior of central and suburban residents in the license plate lottery. When the transit service level in the suburban area is relatively low, the critical VOT for participating in the lottery for suburban residents is lower than that for central residents. The area-based lottery scheme welfare-dominates the city-based lottery scheme. Compared to laissez faire, the implementation of lottery rationing schemes may cause urban sprawl or shrink, depending on the scheme adopted (area-based or city-based) and the road service level.