Economies of Scale in the Taxicab Industry. Some empirical Evidence from the United States

Economies of Scale in the Taxicab Industry. Some empirical Evidence from the United States

There are economies of scale for very small taxicab firms, but over 75,000 trips per year average costs increase, so the curve is U-shaped.

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Deregulating Taxi Services: A Word of Caution

This paper studies pricing and capacity decisions in markets for phone-ordered taxicabs. Firms first choose capacities and then compete in prices. As firm demand increases, so does waiting time. This dampens competition and makes prices too high from the social point of view. Efficiency improves if firms choose large capacities. In a two-firm setting, equilibrium capacities are shown to be larger if both firms maximise total profits than if they maximise profits per cab.

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