ECONOMIC MODEL FOR VEHICLE OWNERSHIP QUOTA POLICY ANALYSIS

Abstract

Over the years, traffic congestion has become an ever more serious issue in many mega-regions worldwide, and has caused huge economic and environmental loss. Having witnessed big increase in the sales of passenger cars, some authorities have turned to vehicle ownership quota policy, which is a direct tool to control the number of vehicles on the road. Two of the most typical ownership quota policies, are the vehicle plate lottery system and vehicle plate auction system. This thesis developed an analytical framework that utilized the joint vehicle ownership and usage decision model to quantitatively measure the impacts of the two quota policies, in terms of compensating variation. It is shown that implementation of vehicle plate lottery system will invite more households who have lower preference of owning a vehicle, and will result in a decrease in net social impact. The thesis then proposed an alternative policy that restricts the lottery to only previous car owners, and shows that it will give a higher net social impact. A numerical example is then conducted to determine the optimal quota ratio for each of the policies, and to compare their social benefits. Various policy implications and future research directions are also discussed.