1. Singapore ERP Scheme
Ching and Denise

2. What is Market Failure?
• Inefficient allocation of resources
• Not produced or consumed at the social
optimal

3. Market Failure in Singapore
Product: too many cars
Negative Externality: Traffic, noise
Solution: ERP

4. ERP Scheme
• Purpose?
- Reduces congestion
• What is Electronic Road Pricing?
– A usage-based tax on roads set by Land Transport Authority
• How does it work?
– Electronic toll collection
• History
– Area Licensing Scheme (1975)
– Electronic Road Pricing (1998)

6. Internalizing the Externalities
Qt ↓ P↑

8. Does it Work?
Yes No.
• Average road speed • Just moved the traffic to
increased by 20% somewhere else
• Traffic has gone down by • Caused traffic along
13% smaller roads
• Increase in car-pooling
• Government gains S$0.1
billion per year

10. Bibliography
• quot;Electronic Road Pricing.quot; Wikipedia, the free encyclopedia. 8
Mar. 2009
<http://en.wikipedia.org/wiki/Electronic_Road_Pricing>.
• quot;Electronic Road Pricing.quot; Land Transport Authority. Land
Transport Authority. 8 Mar. 2009
<http://www.lta.gov.sg/motoring_matters/index_motoring_e
rp.htm>.
• quot;ONE.MOTORING - ERP Rates.quot; ONE.MOTORING - Home. Land
Transport Authority. 8 Mar. 2009
<http://www.onemotoring.com.sg/publish/onemotoring/en/
on_the_roads/ERP_Rates.html>.