The Economic Reasons for Price and Entry Regulation of Taxicabs

The Economic Reasons for Price and Entry Regulation of Taxicabs

In a free market the charges for taxicabs tend to be high. Regulation in New York City has not been properly designed to achieve economic efficiency; but abolition of the present restriction on entry will increase congestion and pollution and attract more passengers from public transport.

Share Content

Share on facebook
Facebook
Share on google
Google+
Share on twitter
Twitter
Share on linkedin
LinkedIn

Related Articles

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.

View Journal »