Does Online Ride-Hailing Service Improve the Efficiency of Taxi Market? Evidence from Shanghai

Abstract

Online ride-hailing services, which are characterized by online matching, are generally considered improving the work efficiency of taxi drivers and bring disruptive changes to the taxi market. We use the historical and contemporaneous trip-level big data of Shanghai online ride-hailing drivers and traditional cruising taxi drivers, structure the data into shift and hour levels, and compare the two types in terms of efficiency. The comparison results indicate that the overall capacity utilization rate of online ride-hailing drivers is slightly higher than that of cruising taxi drivers, but it is mainly driven by part-time drivers. We confirm the role of flexible work and market scale in improving capacity utilization, but do not find the impact of online matching mechanisms. From the perspective of the drivers’ work efficiency, the similar capacity utilization of the two types of full-time workers is consistent with Cramer and Krueger’s (2016) evidence in New York. Online matching and street searching achieve almost equal efficiency in densely populated urban areas. However, from the perspective of supply and demand matching, online ride-hailing creates a more flexible supply and is more adaptable to the changes in demand, which improves the overall taxi market efficiency.