Abstract
In expert markets, different pricing schemes generate different financial incentives for sellers to defraud customers. Using rich microdata on New York City taxi rides, we examine the differences between trips of non-local passengers and those of comparable local passengers, and explore to what extent the differences in trip distance, duration and fare vary with drivers’ financial incentives. We demonstrate that, for trips subject to two-part tariff, the differences are higher when the variable rate is increased or when the post-dropoff occupancy is expected to be lower, and the impact of the post-dropoff occupancy is more pronounced when the variable rate is increased; however, for trips subject to flat-fare scheme, the differences are unaffected by the fare rate or the expected occupancy.
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