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

Research output: Contribution to journal › Article › peer-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 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

Library availability

Discover UIUC Full Text

Cite this

@article{afc37e2996c040fa914df558e2ce2077,

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.",

keywords = "Medallions, Regulation, Taxis, Transportation",

author = "Lewis Lehe and Ayush Pandey",

note = "The authors are grateful to the editor and two reviewers for thorough comments, and the National Science Foundation{\textquoteright}s Civil Infrastructure Systems program for grant CMMI 20-5251, which provided support.",

year = "2022",

month = sep,

doi = "10.1016/j.jue.2022.103488",

language = "English (US)",

volume = "131",

journal = "Journal of Urban Economics",

issn = "0094-1190",

publisher = "Academic Press Inc.",

}

TY - JOUR

T1 - Taxi service with heterogeneous drivers and a competitive medallion market

AU - Lehe, Lewis

AU - Pandey, Ayush

N1 - The authors are grateful to the editor and two reviewers for thorough comments, and the National Science Foundation’s Civil Infrastructure Systems program for grant CMMI 20-5251, which provided support.

PY - 2022/9

Y1 - 2022/9

N2 - 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.

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.

KW - Medallions

KW - Regulation

KW - Taxis

KW - Transportation

UR - http://www.scopus.com/inward/record.url?scp=85135922920&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=85135922920&partnerID=8YFLogxK

U2 - 10.1016/j.jue.2022.103488

DO - 10.1016/j.jue.2022.103488

M3 - Article

AN - SCOPUS:85135922920

SN - 0094-1190

VL - 131

JO - Journal of Urban Economics

JF - Journal of Urban Economics

M1 - 103488

ER -

Taxi service with heterogeneous drivers and a competitive medallion market

Abstract

Keywords

ASJC Scopus subject areas

Online availability

Library availability

Related links

Fingerprint

Cite this