Expectations Formation and Forecasting of Vehicle Demand: An Empirical Study of the Vehicle Quota Auctions in Singapore

Sing-Fat Chu (), Winston Koh and Y. K. Tse ()
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Sing-Fat Chu: National University of Singapore

No 02-2004, Working Papers from Singapore Management University, School of Economics

Abstract: This paper studies the 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 the 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 license premiums.

Keywords: quota licenses; vehicle demand; learning; expectations formation (search for similar items in EconPapers)
JEL-codes: D44 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2003-12
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Published in SMU Economics and Statistics Working Paper Series

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Journal Article: Expectations formation and forecasting of vehicle demand: an empirical study of the vehicle quota auctions in Singapore (2004)
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