Studies on taxicab markets (New York City, Massachusetts)

This dissertation studies theoretical and empirical aspects of taxicab markets, with the aim of improving taxicab regulation. The first chapter discusses previous theoretical work and points out a special feature of taxicab markets: demand for taxicabs depends not only on the price of a ride but also on the time that consumers have to wait to obtain a cab. Vacant taxicabs increase the value of the service by lowering waiting times. Another feature, specific to cruising taxicab markets (in which consumers hail passing taxicabs), is that the spatial setting may dampen price competition.; These special features of taxicab markets have been used to justify entry and price regulations. Efficient regulation requires that the cost of an additional vacant taxicab equal the benefit that consumers derive from it, namely the monetary value of the shorter expected waiting time.; The second chapter estimates a model of a regulated taxicab market using data from inspections of New York City taxicabs. The dataset contains information about vacant and occupied mileage, rarely available elsewhere. This exercise yields an estimate of the elasticity of taxicab demand with respect to taxicab vacancies, a key parameter for designing optimal policy, but one that has not previously been estimated.; Chapter III carries out a calibration exercise for the Boston taxicab market, using available data as well as estimates for demand parameters obtained in the previous chapter. The exercise suggests that the condition for efficient regulation derived in Chapter I has not been achieved: lowering taxi fares in Boston is projected to increase consumer surplus without hurting taxicab profits. It is also shown that eliminating exclusive cruising regulations, which forbid taxicabs to cruise in adjacent cities, would improve outcomes in Boston and Cambridge.