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An Economic Analysis of Regulated Taxicab Markets

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  • Daniel Flores-Guri

Abstract

The literature on taxicab markets has provided theoretical insights regarding the peculiarities of taxicab markets. A key finding is the positive effect that excess capacity, in the form of vacant taxicabs, has on the demand for taxicab service. Lack of data on taxicab markets has made estimating these models difficult. This paper models a taxicab market in which entry and fares are regulated. It estimates the model using data from meter inspections of New York City taxicabs. It finds a positive, inelastic relationship between vacant taxicabs and demand for taxicab service. The estimates of the parameters of the model are used to evaluate the effects of policy changes such as increases in the regulated fare and in the number of taxicab medallions.

Suggested Citation

  • Daniel Flores-Guri, 2003. "An Economic Analysis of Regulated Taxicab Markets," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 23(3_4), pages 255-266, December.
    • Handle: RePEc:kap:revind:v:23:y:2003:i:3_4:p:255-266
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    References listed on IDEAS

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    1. De Vany, Arthur S, 1975. "Capacity Utilization under Alternative Regulatory Restraints: An Analysis of Taxi Markets," Journal of Political Economy, University of Chicago Press, vol. 83(1), pages 83-94, February.
    2. John R. Schroeter, 1983. "A Model of Taxi Service under Fare Structure and Fleet Size Regulation," Bell Journal of Economics, The RAND Corporation, vol. 14(1), pages 81-96, Spring.
    3. Arnott, Richard, 1996. "Taxi Travel Should Be Subsidized," Journal of Urban Economics, Elsevier, vol. 40(3), pages 316-333, November.
    4. Cairns, Robert D. & Liston-Heyes, Catherine, 1996. "Competition and regulation in the taxi industry," Journal of Public Economics, Elsevier, vol. 59(1), pages 1-15, January.
    5. Bruce Schaller, 1999. "Elasticities for taxicab fares and service availability," Transportation, Springer, vol. 26(3), pages 283-297, August.
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    Cited by:

    1. Christensen, Peter & Osman, Adam, 2021. "The Demand for Mobility: Evidence from an Experiment with Uber Riders," IZA Discussion Papers 14179, Institute of Labor Economics (IZA).
    2. Li, Baicheng & Szeto, W.Y., 2019. "Taxi service area design: Formulation and analysis," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 125(C), pages 308-333.
    3. Wong, R.C.P. & Szeto, W.Y., 2022. "The effects of peak hour and congested area taxi surcharges on customers’ travel decisions: Empirical evidence and policy implications," Transport Policy, Elsevier, vol. 121(C), pages 78-89.
    4. John Rose & David Hensher, 2014. "Demand for taxi services: new elasticity evidence," Transportation, Springer, vol. 41(4), pages 717-743, July.
    5. Yang, Hai & Leung, Cowina W.Y. & Wong, S.C. & Bell, Michael G.H., 2010. "Equilibria of bilateral taxi-customer searching and meeting on networks," Transportation Research Part B: Methodological, Elsevier, vol. 44(8-9), pages 1067-1083, September.
    6. Zhang, Kenan & Nie, Yu (Marco), 2021. "Inter-platform competition in a regulated ride-hail market with pooling," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 151(C).
    7. Fabien Leurent, 2019. "Microeconomics of a taxi service in a ring-shaped city," Working Papers hal-02047269, HAL.
    8. Dali Wei & Changwei Yuan & Hongchao Liu & Dayong Wu & Wesley Kumfer, 2017. "The Impact of Service Refusal to the Supply–Demand Equilibrium in the Taxicab Market," Networks and Spatial Economics, Springer, vol. 17(1), pages 225-253, March.
    9. Yang, Hai & Yang, Teng, 2011. "Equilibrium properties of taxi markets with search frictions," Transportation Research Part B: Methodological, Elsevier, vol. 45(4), pages 696-713, May.
    10. Ting Wang & Yong Zhang & Meiye Li & Lei Liu, 2019. "How Do Passengers with Different Using Frequencies Choose between Traditional Taxi Service and Online Car-Hailing Service? A Case Study of Nanjing, China," Sustainability, MDPI, vol. 11(23), pages 1-18, November.
    11. Christopher Snyder, 2003. "Introduction to the 2003 International Industrial Organization Conference Special Issue," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 23(3), pages 175-177, December.
    12. Zhang, Kenan & Nie, Yu (Marco), 2021. "To pool or not to pool: Equilibrium, pricing and regulation," Transportation Research Part B: Methodological, Elsevier, vol. 151(C), pages 59-90.
    13. Li, Baicheng & Szeto, W.Y., 2021. "Modeling and analyzing a taxi market with a monopsony taxi owner and multiple rentee-drivers," Transportation Research Part B: Methodological, Elsevier, vol. 143(C), pages 1-22.
    14. Rose, John M. & Hensher, David A., 2018. "User satisfaction with taxi and limousine services in the Melbourne metropolitan area," Journal of Transport Geography, Elsevier, vol. 70(C), pages 234-245.
    15. Thomas J. Weinandy & Michael J. Ryan, 2021. "Flexible Ubers and Fixed Taxis: the Effect of Fuel Prices on Car Services," Journal of Industry, Competition and Trade, Springer, vol. 21(2), pages 139-168, June.

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