Open Versus Sealed-Bid Auctions: Testing for Revenue Equivalence Under Singapore's Vehicle Quota System
Singapore Management U. Economics and Social Sciences Working Paper No. 16-2003
21 Pages Posted: 10 Jan 2005
Date Written: August 2003
Using data from the auction of vehicle quota licenses in Singapore, we study if revenue equivalence holds when the auction format was switched from a sealed-bid format (May 1990 to June 2001) to an open bidding format since July 2001. Our econometric analysis indicates the change in auction format led to a change in bidding behavior. On average, the quota license premium under the open bidding format is about US$1,000 (about 7.5% of the Category E license price in June 2001) lower, compared to the forecast level that would have prevailed if there had been no change in the auction format.
Keywords: Vehicle quotas, licenses, auction theory, revenue equivalence
JEL Classification: D44, D45, L91, R48
Suggested Citation: Suggested Citation