Taxi service with heterogeneous drivers and a competitive medallion market

Lewis Lehe; Ayush Pandey

doi:10.1016/j.jue.2022.103488

Taxi service with heterogeneous drivers and a competitive medallion market

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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 language	English (US)
Article number	103488
Journal	Journal of Urban Economics
Volume	131
DOIs	https://doi.org/10.1016/j.jue.2022.103488
State	Published - Sep 2022

Keywords

Medallions
Regulation
Taxis
Transportation

ASJC Scopus subject areas

Economics and Econometrics
Urban Studies

Online availability

10.1016/j.jue.2022.103488

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title = "Taxi service with heterogeneous drivers and a competitive medallion market",

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.",

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author = "Lewis Lehe and Ayush Pandey",

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AB - 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.

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Taxi service with heterogeneous drivers and a competitive medallion market

Abstract

Keywords

ASJC Scopus subject areas

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