Electric taxi licensing under a tradable credit scheme: model and application

Abstract

ABSTRACT Taxi market modeling has long attracted researchers’ and practitioners’ attention, with a variety of models presented to investigate the effects of different market regulation regimes. Motivated by the increasing interest in and theoretical advantages of tradable credit systems for mobility management, this study investigates the use of a tradable credit scheme for taxi licensing. A mixed integer non-linear programming problem is formulated to determine the credit price, daily charge and number of vehicles in order to maximize social welfare. In the social benefit-maximizing solution, the supply of conventional taxis is exhausted, while about 50% of the available electric taxi drivers enter the market. Sensitivity analysis shows that increasing the validity period of the credits, reducing the daily system fee for electric taxis or subsidizing the purchase of electric taxis could lead to greater social benefits by increasing the profit margin of electric taxi drivers and incentivizing their wider adoption.