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Experimental analysis of variable surcharge policy of taxi service auction

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  • Pueboobpaphan, Suthatip
  • Indra-Payoong, Nakorn
  • Opasanon, Sathaporn

Abstract

Motivated by the taxi refusal problem in Bangkok, this paper presents a novel approach of demand-supply matching for taxi services through double auction, where passengers and drivers can offer and ask for a surcharge in addition to a regular meter fare. This system is equivalent to a variable surcharge policy as opposed to the existing fixed surcharge policy. The objective of this paper is twofold. First, we examine the design of information content for taxi service auction under two conditions: with and without time-cost. Laboratory experiments with student subjects were conducted to investigate the effect of different levels of information content on bidding strategies and market efficiency. The results show that time-cost has a significant effect on individuals’ bidding strategy and market efficiency. In addition, providing bidders with greater information does not necessarily lead to better efficiency. Second, we compare the performance of the proposed method with that of the fixed surcharge policy. It is found that the variable surcharge policy outperforms the fixed surcharge policy in several aspects. In particular, the variable surcharge policy provides a better opportunity for passengers to get the taxi service and obtains a higher market efficiency at least as good as the fixed surcharge policy.

Suggested Citation

  • Pueboobpaphan, Suthatip & Indra-Payoong, Nakorn & Opasanon, Sathaporn, 2019. "Experimental analysis of variable surcharge policy of taxi service auction," Transport Policy, Elsevier, vol. 76(C), pages 134-148.
    • Handle: RePEc:eee:trapol:v:76:y:2019:i:c:p:134-148
    DOI: 10.1016/j.tranpol.2017.12.002
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