The Economic Reasons for Price and Entry Regulation of Taxicabs. A Comment

The Economic Reasons for Price and Entry Regulation of Taxicabs. A Comment

A comment on the article and later rejoinder by Professor Shreiber, published in this Journal in September 1975 and September 1977.

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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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