Expectations Formation and Forecasting of Vehicle Demand: An Empirical Study of the Vehicle Quota Auctions in Singapore
This paper studies expectations formation and forecasting of vehicle demand in Singapore under the vehicle quota system. Under the system, a car buyer must first bid for a vehicle license in monthly auctions in order to purchase a new car. We construct an econometric model to test the hypothesis that past bid distributions of the license auctions contain information that car buyers can use to update their expectations about the intensity of market demand, forecast license premiums and formulate their bidding strategies in future auctions. Our empirical analysis indicates that past bid distributions have a good degree of predictive power for the vehicle license premiums.
Quota licenses; Vehicle demand; Learning; Expectations formation
Asian Studies | Economics | Transportation
Transportation Research Part A: Policy and Practice
Chu, Singfat; TSE, Yiu Kuen; and KOH, Winston T. H..
Expectations Formation and Forecasting of Vehicle Demand: An Empirical Study of the Vehicle Quota Auctions in Singapore. (2004). Transportation Research Part A: Policy and Practice. 38, (5), 367-381. Research Collection School Of Economics.
Available at: http://ink.library.smu.edu.sg/soe_research/427
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