A Study On The Instiutional Shift And The Stakeholers’Performance Change Of The Taxi Industry

The taxis in the real sense have appeared in our country after introducing the reform and opening-up policy. Then, with the rapid development of this industry, it ensures the effective operation of the urban public transportation, becoming an important means of transportation which is closely interrelated to our everyday life. At the same time, the taxi industry has exposed a large number of problems during its development, intensifying contradictions within the industry and then hindering its normal development. Since2004, it has taken place over a hundred cab driver strike events nationwide. In addition, problems within the industry, such as sudden death of cab drivers, collective appealing to higher authority for help of drivers, the widespread phenomenon of illegal taxi business, the difficult problem of taking a taxi, cab drivers making a detour and the huge profits of the taxi company, enable the taxi industry to become a true "public topic", fully exposing the institutional defects within the industry. According to the preliminary analysis, the real reasons behind the above-mentioned problems rest with factors, such as heavy traffic, the rise in oil prices, low taxi fare, high costs submitting to the taxi company, over-long working hours of cab drivers and the rigid quantity control. However, fundamentally, the problem of "market failure" which grows out of the intrinsic contradiction between the taxi industry itself and the market economy in the process of continuous improvement and the problem of "government failure" which results from the defects of the regulation institution remain unsolved in the taxi industry.The taxi, a supplementary means of urban public transportation, enjoys a special market positioning. As the taxi industry is regulated by the government, it faces an eternal economic subject:weighing and balancing the regulation and competition. In addition, systems which will affect the development of the industry consist of the taxi industry system and other related social systems. Therefore, it objectively requests us to inspect the taxi industry system in an all-around manner. However, the establishment, implementation and operation of the institution are a dynamic process, which implies that it is particularly necessary to observe the taxi industry from the perspective of the institutional shift. The institution is an equilibrium selection of the game, and the institutional shift results from the economic agents maximizing their earnings through various strategies. The game theory is a natural analysis tool for the New Institutional Economics theory. Therefore, this paper discusses the process, characteristics and causes of the taxi industry’s institutional shift with the help of the New Institutional Economics theory and analyzes the profit game relations among the industry’s interest subjects, such as governments, cab drivers, drivers of "illegal taxis", taxi companies and passengers through the game analytical method, analyzing optimal decision behaviors of each game parts in the pursuit of the maximization of their own interests under the specific and improved institutional constraints. Finally, as the industry performance and the performance of interest subjects are all determined by the institutional arrangement of the taxi industry, this paper systematically evaluates the performance of various interest subjects after investigating the cab drivers and passengers of Hangzhou, Nanjing, Yiwu, Lishui and Yangzhou, and comprehensively assesses the performance of the institutional shift of our country’s taxi industry together with the performance analysis of interest subjects in typical cities. The dynamic analysis of the institutional shift in the taxi industry and the combinative analysis of interest subjects’ behavioral option and performance can be used as the reference for the industry reform.Above all, this paper explains the relevant concepts, and the institutional arrangement of the taxi industry which systematically discusses the regulatory regime of the government, the management mode of the industry, and the contractual relationship between the government and other interest subjects. Next, the institutional change of the taxi industry which extracts and purifies the main regulations and the formation period, analyzes characteristics and reasons of the change by investigating30-year’s process of the institutional change of the taxi industry, attributing reasons to the scarce management right, the temptation of economies of scale, the shift of the risk, and the change and externality of the transaction costs, and analyzing how the above-mentioned factors influence the process of the institutional change of the taxi industry. Thirdly, this paper analyzes the optimum selection of interest subjects’behaviors during the institutional shift of the taxi industry from the perspective of the game, and researches into the game relationship among the government, cab drivers,"illegal" cab drivers, taxi companies and passengers, investigating strategic choices of actors under the specific institution. At last, this paper systematically evaluates the performance of various interest subjects after investigating the cab drivers and passengers of Hangzhou, Nanjing, Yiwu, Lishui and Yangzhou, and comprehensively assesses the performance of the institutional shift of our country’s taxi industry together with the performance analysis of interest subjects in typical cities.This paper’s conclusions are as follows:among the interest subjects in the taxi industry, the government plays a particularly important role; passengers remains in a naturally weak position in the controlling system; drivers also belong to the vulnerable group in the industry, and a single driver is unable to hold a talk; taxi companies with very special nature play the most powerful role in the industry by means of license plates;"illegal" cab drivers are not authorized to undertake the passenger services, but they have a positive effect in a controlling failure market. In view of the above-mentioned, this paper proposes the following suggestions:amending the role orientation of the government, reversing the industry’s current existence of non-neutral system, combing the deregulation with the changes in the regulatory approach, establishing the joint-action mechanism for the taxi fare adjustment, establishing a trade union of the taxi industry, and paying great attention to the anti-monopoly.