The distributional effects of lotteries and auctions—License plate regulations in Guangzhou

Shenhao Wang and Jinhua Zhao

Transportation Research Part A: Policy and Practice, 2017, vol. 106, issue C, 473-483

Abstract: Lotteries and auctions are common ways of allocating public resources, but they have rarely been used simultaneously in urban transportation policies. This paper presents a unique policy experiment in Guangzhou, China, where lotteries and auctions are used in conjunction to allocate vehicle licenses. Guangzhou introduced vehicle license regulations to control the monthly quota of local automobile growth in 2012. To obtain a license, residents are required to choose between the lottery and auction method. Since the introduction of the regulations, there has been heated debates on the distributional effects of lotteries and auctions; however, the debates have not been grounded in empirical studies. We analyze the distributional effects of such mixed mode of resource allocation in a positive manner based on individual behavioral choices. We conducted a survey in January 2016 (n = 1000 people ∗ 12 months), and used mixed logit models to analyze how socio-economic status, including income and household automobile ownership, determined people’s choices among lottery, auction, and non-participation alternatives. We find that income increased participation, but did not influence non-car owners’ choices between lotteries and auctions, which contrasts with the common notion that lotteries benefit the poor. Additionally, the positive impact of car ownership on participation indicates a car-dependent trajectory for automobile growth. The significant socio-economic differentiators between lotteries and auctions were age, gender, and education. Proxies of mobility needs were insignificant overall. The program attributes had a much larger impact than all other variables—people were more likely to choose lotteries with higher winning rates and more participants and more likely to choose auctions with higher prices and more participants. We concluded that for those who participated, the choice between lotteries and auctions did not depend on their income or mobility needs but, rather, the probability of winning plates and the opportunity for speculation.

Keywords: Automobile regulation; Distributional effect; Lottery; Auction; Mixed logit model (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (16)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0965856417303324
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:transa:v:106:y:2017:i:c:p:473-483

Ordering information: This journal article can be ordered from
http://www.elsevier.com/wps/find/supportfaq.cws_home/regional
https://shop.elsevie ... _01_ooc_1&version=01

DOI: 10.1016/j.tra.2017.10.011

Access Statistics for this article

Transportation Research Part A: Policy and Practice is currently edited by John (J.M.) Rose

More articles in Transportation Research Part A: Policy and Practice from Elsevier
Bibliographic data for series maintained by Catherine Liu ().