CAPACITY UTILIZATION UNDER ALTERNATIVE REGULATORY RESTRAINTS: AN ANALYSIS OF TAXI MARKETS

Both the Averch-Johnson (A-J) model and the Chamberlin model fail to consider the value of excess capacity to consumers. Service industries, whether they are regulated or not, will usually have excess capacity in the Chamberlinian sense because this capacity conserves time for consumers. This paper examines a model of the taxi industry where allowance is made for capacity to affect the value or quality of the service through its effect on waiting time. The central issue is to determine equilibrium output, capacity, and the utilization of capacity when the market is organized as a franchised monopoly, through a medallion system, and when there is free entry, and to exhibit the relationship among these variables and prices, cost of capacity and output, and policies of the regulator. It is found that many of the characteristics of taxi markets that would appear to confirm the monopolistic-competition thesis arise because of the nature of regulation of these markets.

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• Corporate Authors:

  University of Chicago Press

  1427 E. 60th Street
  Chicago, IL  United States  60637-2954
• Authors:
  • De Vany, A S
• Publication Date: 1975-2

Media Info

• Pagination: p. 83-94
• Serial:
  • Journal of Political Economy
  • Volume: 83
  • Issue Number: 1
  • Publisher: University of Chicago Press
  • ISSN: 0022-3808

Subject/Index Terms

• TRT Terms: Consumers; Equilibrium (Mechanics); Level of service; Mathematical models; Monopoly; Prices; Taxicabs; Waiting time
• Uncontrolled Terms: Capacity; Models
• Subject Areas: Economics; Highways; Law; Public Transportation; Society;

Filing Info

• Accession Number: 00084214
• Record Type: Publication
• Files: TRIS
• Created Date: Jun 10 1981 12:00AM