The Economy of Singapore
Managing Scarcity: COE and Road Pricing
Singapore controls car numbers with a quota system and charges for road use to limit congestion in a tiny territory.
Prices are used to manage scarce road space.
COE
A Certificate of Entitlement, bought at auction, gives the right to own a car for ten years, and it can cost more than the car itself.
ERP
Electronic Road Pricing charges drivers for using busy roads at peak times.
Public transport
A dense MRT and bus network gives alternatives.
Lesson
Prices can ration scarce space without banning use.
Auction price
A COE costing tens of thousands of dollars is bid for by would-be car owners.
Ignoring the role of public transport
Pricing works because alternatives exist.
Key takeaways
- COEs cap car numbers.
- ERP charges for congestion.
- Public transport supports the system.
- Prices ration space.
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