The economic impact of Transportation Network companies on the traditional taxi Sector: An empirical study in Spain

Abstract

Transportation Network Companies (TNCs), also referred to as ride-sharing or app-based on-demand ride services, have gained momentum. The phenomenon has created debate in the media and faced heated reactions from the traditional taxi sector. Yet surprisingly, the phenomenon is still under-researched in the specialized scholarly literature on transport systems. There is a lack of empirical evidence about the real impact of these systems on the traditional taxi sector. This article aims to fill this gap in the literature by analyzing empirically the impact of TNCs on the traditional taxi sector in Spain, a specific country-case where the phenomenon has been fiercely opposed. With this aim, a comparative analysis of the economic and financial situation of 416 traditional Spanish taxi companies is conducted. The findings show that the new competitors have had a significant negative impact on the profitability of the traditional taxi companies in Madrid and Barcelona, but have not affected other indicators and areas analyzed in the initial stage of TNCs. Implications for a set of stakeholders, including managers in the traditional sector, investors and policymakers, are discussed, together with potential avenues for further research.