NATURE OF EQUILIBRIUM IN THE MARKET FOR TAXI SERVICES

This paper reports an investigation of the mechanism by which demand and supply are quilibrated in the regulated taxi market. A simple model is developed in which the demand for taxi trips, as measured by the passenger arrival rate, is a function of a set of exogenous variables, including fares, and of the endogenous variable, taxi availability, is developed. The profitability of taxi operations is determined by exogenous factors and by an endogenous variable, taxi utilization. The number of taxi vehicles supplied is determined by the profit function and by the industrial structure. Taxi availability, which is measured by expected waiting time, and utilization, which is measured by the expected proportion of time the vehicle is occupied, are determined by both the passenger arrival rate and the number of taxi operating. The complexity of the taxi market, particularly its spatial and temporal aspects, makes considerable idealization necessary for its analysis. Even the simple model developed here does not admit a closed form solution for its equilibrium conditions, thereby constraining the work to a numerical example. The most striking feature of the model is its demonstration that in the taxi market supply generates demand and vice versa since an exogenously caused increase in the number of taxis operating will decrease waiting times and thus increase the passenger arrival rate, which will increase the taxi occupancy rate and thus increase profits and, hence, the taxi supply. This supply-demand interaction can be explosive but eventually must damp out. /Author/

• Record URL:
  • http://onlinepubs.trb.org/Onlinepubs/trr/1976/619/619-004.pdf
• Summary URL:
  • https://scholar.google.com/scholar_lookup?title=NATURE+OF+EQUILIBRIUM+IN+THE+MARKET+FOR+TAXI+SERVICES&author=C.+Manski&author=J.+Wright&publication_year=1967
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• Supplemental Notes:
  • Publication of this paper sponsored by Committee on Urban Transport Service Innovations (Paratransit). Distribution, posting, or copying of this PDF is strictly prohibited without written permission of the Transportation Research Board of the National Academy of Sciences. Unless otherwise indicated, all materials in this PDF are copyrighted by the National Academy of Sciences. Copyright © National Academy of Sciences. All rights reserved
• Authors:
  • Manski, Charles F
  • Wright, J David
• Publication Date: 1967

Media Info

• Media Type: Print
• Features: Figures; References;
• Pagination: pp 11-15
• Monograph Title: Innovations in Transportation System Planning
• Serial:
  • Transportation Research Record
  • Issue Number: 619
  • Publisher: Transportation Research Board
  • ISSN: 0361-1981

Subject/Index Terms

• TRT Terms: Demand; Economic analysis; Fares; Markets; Mathematical models; Passengers; Profits; Supply; Taxicabs; Waiting time
• Uncontrolled Terms: Availability; Supply and demand
• Subject Areas: Economics; Highways; Passenger Transportation; Planning and Forecasting; Public Transportation;

Filing Info

• Accession Number: 00163925
• Record Type: Publication
• ISBN: 0309025982
• Report/Paper Numbers: Intrm Rpt.
• Files: TRIS, TRB
• Created Date: Oct 13 1981 12:00AM