The Economic Effects Of Uber On Taxi Drivers In Taiwan

The ridesharing economy has caught a great deal of attention from researchers and policymakers. However, due to the dearth of available data, not much empirical evidence has been provided. This article empirically assesses the economic impact of Uber service on taxi drivers’ business performance using a case study in Taiwan as an illustration. A difference-in-difference model is estimated using a population-based dataset of 29,434 taxi drivers. The results indicate that Uber reduced regular taxi drivers’ service revenue by approximately 12 percent in the initial year and 18 percent in the third year of entry of Uber. This result may suggest a substitution relationship between Uber service and taxi operation. Moreover, the negative impact of Uber is more pronounced among taxi motorcade members, which may indicate that Uber competes with taxi passengers who usually use an electronic device to call for ride service. By further looking at the capacity utilization and operating miles, it is evident that the negative impacts of Uber on taxi drivers’ service revenue are more likely associated with the reduction in operating miles of taxi drivers. To cope with competition from Uber, taxi drivers are more likely to have advertisements in or on the taxicab and to provide better ride service.