The Second Avenue Subway's Effect on Taxi and Ride-Hail Usage in New York City

Abstract

The long debate on the optimal regulation of car services has been reinvigorated with the introduction of ride-hail regulation in major cities. Critics of the regulation have argued that regulation restricting car services like ride-hail and taxis are leaving passengers stranded. Instead, they argue that policymakers should focus their efforts in expanding transit to reduce car service usage. It is unclear whether this alternative policy proposal will work, because there is little evidence in the literature about the substitution patterns between any car service and transit. This paper uses the opening of the Second Avenue Subway in New York City in 2017 as a natural experiment to characterize substitution patterns from both taxis and ride-hail to transit. I use broad data that covers 74% of all car service trips in NYC. The data includes shared and private ride-hail from two competing platforms, Uber and Via. I find that the SAS caused trip volume to decrease by 13.3% total along the origin-destination pairs (OD pairs) easily served by the subway. Decreases were more dramatic for shared trips, with UberPool trips decreasing by 49% and shared Via trips by 38%. I argue that the decreases in trip volume were driven by demand, rather than supply, platform actions, or search frictions.Finally, I provide suggestive evidence that these decreases resulted in a modest improvement in congestion in the affected OD pairs.