The car and motorcycle population will not be allowed to increase from next February, with the Land Transport Authority announcing yesterday that it will no longer be factoring in growth when setting the certificate of entitlement (COE) quota.
Currently, it factors in a growth rate of 0.25 per cent per year.
The LTA had hinted at such a move previously, and said yesterday that it was proceeding “in view of Singapore’s land constraints and our commitment to continually improve our public transport system”.
Motor industry players said the change would likely push up COE premiums.
The LTA also said yesterday that there will be fewer COEs available for all vehicles except motorcycles for the November to January quota period.
———-In this article,
- Explain how the concept of the scarcity applies in this example;
- Draw the supply and demand curves before and after the policy change; and
- Explain what you think is likely to happen to the price of the COE after the policy change is implemented.