THE IMPACT OF THE VEHICLE QUOTA SYSTEM ON VEHICLE DEMAND IN SINGAPORE.

Abstract

This thesis analyses the demand response to multiple aspects of the vehicle quota system in Singapore to gain insights on the impact of current transport management policies. In the first part, a discrete choice model is used to estimate the effect of Certificate of Entitlement (COE) premiums on the relative market shares of economy, regular and premium brands. To account for price endogeneity in COE, the Vehicle Emissions Scheme (VES) policy is used as an instrumental variable. The results reveal that an increase in COE premium is associated with a shift in market shares from economy brands towards regular and premium brands. This phenomenon hints at the affluence of car buyers and raises implications on the equitable distribution of cars. As the VES induced a fall in premiums, this second part of this study estimates the increase in COE revalidations relative to deregistrations following decreases in premiums.