An Analysis of Efficiency and Equity of the Car Plates Allocation Mechanism in Guangzhou

Guangzhou city is the first city to use the auction and lottery hybrid mechanism to allocate the car plates in traffic restriction cities. The efficiency and equity of allocation and the effects of talent subsidy are analyzed. Firstly, the Nash equilibrium of the game under Guangzhou Mechanism is analyzed and the willingness to pay for the car plates of auction participants are higher than the willingness to pay of the lottery participants. Secondly, after estimating the tail distribution of the participants’ willingness to pay, we find that the ratio of the consumer surplus to the revenue is about 5∶1, and the Gini coefficient of car plate accessibility is 0.42. Thirdly, we find that the talent subsidy may increase the bidding price and decrease the revenue from the car plate auction. The effect of talent subsidy on the efficiency and equity of allocation depends on the distribution of the willingness to pay of qualified participants of the talent subsidy.