The Review of Economic Studies · 2021 · 112 citations · 44 references
Social SciencesBusiness EconomicsEconomicsMicroeconomicsTransportUrban EconomicsDemand TheoryMatching TheorySpatial EconometricsSpatial EquilibriumTransportation EconomicsTravel DemandConsumer Surplus AnalysisEfficiencyPricing Under Tariff RegimesSpatial Equilibrium ModelingSpatial SearchTaxi OperationsTaxi RegulationUrban Spatial Equilibrium
The study examines how taxi regulations create inefficiencies through search frictions and mis‑allocation by analyzing the dynamic spatial equilibrium of taxis. The authors develop a dynamic spatial search and matching model and apply it to a comprehensive dataset of New York City yellow medallion taxis to compute the equilibrium distribution of vacant cabs and intraday demand. The model estimates that the weekday New York market generates about $5.7 million in daily welfare, yet 53,000 customers miss cabs, and that simple tariff pricing could raise consumer surplus by up to $227 thousand and add roughly 49,000 daily matches, comparable to gains from perfect matching technology.
Abstract This article analyses the dynamic spatial equilibrium of taxicabs and shows how common taxi regulations lead to substantial inefficiencies as a result of search frictions and mis-allocation. To analyse the role of regulation on frictions and efficiency, I pose a dynamic model of spatial search and matching between taxis and passengers. Using a comprehensive dataset of New York City yellow medallion taxis, I use this model to compute the equilibrium spatial distribution of vacant taxis and estimate intraday demand given price and medallion regulations. My estimates show that the weekday New York market achieves about $\$5.7 million in daily welfare or about $\$27 per trip, but an additional 53 thousand customers fail to find cabs due to search frictions. Counterfactual analysis shows that implementing simple tariff pricing changes can enhance allocative efficiency and expand the market, offering daily consumer surplus gains of up to $\$227 thousand and up to 49 thousand additional daily taxi-passenger matches, a similar magnitude to the gain in matches generated by adopting a perfect static matching technology.
44
Entry, Exit, and firm Dynamics in Long Run Equilibrium
Hugo A. Hopenhayn · Econometrica · 1992 · 2.9K citations
On Money as a Medium of Exchange
Nobuhiro Kiyotaki, Randall Wright · Journal of Political Economy · 1989 · 1.4K citations