CONTROL OF VEHICLE OWNERSHIP AND MARKET COMPETITION: THEORY AND SINGAPORE'S EXPERIENCE WITH THE VEHICLE QUOTA SYSTEM

Since its introduction in 1990, Singapore's vehicle quota system (VQS) has been extensively studied, but limited data has prevented a full analysis of the impact of the VQS on some aspects of the car distributor industry. This study uses data recently made available by the Land Transport Authority of Singapore to analyze the populations and new registrations of different brands of passenger cars and motorcycles. Findings show an increase in concentration of the car distributorship industry, as the market shares of the top distributors have steadily increased even though the annual growth rate of vehicle population is capped at 3% per year. Average dealer markups for the period of August 2002 to September 2003 are similar to those reported in earlier studies. These empirical findings are then related to a theoretical model of a differentiated-good oligopoly operating under an industry sales constraint. This model predicts that competition among car distributors may intensify, increasing the pressure of profitability. A simple model of the optimal vehicle quota based on several simplifying assumptions is also presented to illustrate the possibility of complementing the existing method of determining the annual license quota with an empirical estimate of the optimal quota.

  • Availability:
  • Corporate Authors:

    Elsevier

    The Boulevard, Langford Lane
    Kidlington, Oxford  United Kingdom  OX5 1GB
  • Authors:
    • Koh, WTH
  • Publication Date: 2003-11

Language

  • English

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Filing Info

  • Accession Number: 00961834
  • Record Type: Publication
  • Files: TRIS
  • Created Date: Aug 18 2003 12:00AM