Car License Auction: Theory and Experimental Evidence

Lijia Tan () and Lijia Wei
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Lijia Tan: The Wang Yanan Institute for Studies in Economics and MOE Key Laboratory in Econometrics, Xiamen University

No 1401, Working Papers from Xiamen Unversity, The Wang Yanan Institute for Studies in Economics, Finance and Economics Experimental Laboratory

Abstract: In Singapore and many Chinese cities, tens of thousands of people participate in car license auctions each month. In a car license auction, many car licenses are sold but each participant can only bid for one license. We examine the theoretical properties of three auction formats: Shanghai auction, Guangzhou auction, and Singapore auction. Our main results are that (1) No equilibrium of the Shanghai auction can guarantee an efficient allocation, (2) the Singapore auction allocates objects efficiently if and only if a unique market clearing price does not exist, and (3) the Guangzhou auction is efficient if bidders are symmetric. The experimental evidence confirms our theoretical prediction. Our experiment also shows that the learning effects over time are quite different among these auction formats.

Keywords: Auction; Car License; Laboratory Experiment (search for similar items in EconPapers)
JEL-codes: C92 D02 D04 D44 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2014-09-02, Revised 2014-09-02
New Economics Papers: this item is included in nep-exp, nep-gth, nep-sea and nep-tre
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