Taxi service with heterogeneous drivers and a competitive medallion market

Lewis Lehe, Ayush Pandey

Research output: Contribution to journalArticlepeer-review

Abstract

This paper incorporates two novelties into steady-state, macroscopic models of street-hail taxi service: (i) heterogeneous drivers; (ii) explicit treatment of a competitive rental market for medallions (the rights to cruise for passengers). When drivers vary only by reservation wage, issuing medallions raises every driver's take-home pay, and the social optimum requires subsidy. When drivers vary only by marginal cost, issuing medallions may hurt drivers with low-enough marginal costs. Also, when quality declines with marginal cost, the social optimum may require a binding medallion quota or tax.

Original languageEnglish (US)
Article number103488
JournalJournal of Urban Economics
Volume131
DOIs
StatePublished - Sep 2022

Keywords

  • Medallions
  • Regulation
  • Taxis
  • Transportation

ASJC Scopus subject areas

  • Economics and Econometrics
  • Urban Studies

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