Auctioning the right to have cars

Adapted extract from an article by Brian James in the Times.

Each quarter the Singapore government works out how many new cars it can permit in Singapore (based on numbers scrapped and roads progress) and allocates so many certificates to the four classes of private car, goods vehicle and motorcycles. Would-be owners get a form and make their bid for a Certificate of Entitlement to Purchase a new car.

In the first quarter, Singapore is to permit 14,000 new vehicles. In the family car category, 8,944 citizens bid for 4,583 certificates. The highest bid was more than L4,000, the lowest 33p. Officials counted from the top and the 4,583rd best bid was L1,007. As the lowest successful bid, this set the price for all certificates sold in this category.

'The 4,583rd best bid was L1,007. As the lowest successful bid, this set the price for all certificates sold'

Would not this system militate against the lower-paid? 'A little,' said Mrs Maria Choy, director of the Land (Transport) Division, 'but we have fine public transport ... the forecast was that as the economy boomed we would be moving towards 350,00 private cars on the island. The government tried to control the growth by taxes but it was all guesswork. So we decided on this approach. Let the government decide how many cars we could tolerate. Let the public decide the price they were prepared to pay to own one of them.'

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