Taxicab Industry Research Articles

Related Diversification and Outsourcing in the Taxicab Industry

This paper studies how firms reorganize after diversifying into related businesses. Specifically, we propose that outsourcing is one way to reduce the coordination costs that arise in multi-divisional firms. We, also, examine the mechanisms underlying coordination costs, and show how alternative theories lead to contrasting predictions about the link between diversification and outsourcing. We test these propositions using novel micro-data on taxicab and limousine firms from the Economic Census. The results show that taxicab fleets outsource, by shifting ownership of taxicabs to drivers, when they diversify into the limousine business. Moreover, the magnitude of the shift toward driver ownership is larger for firms in less urban markets, where the tasks of taxicab and limousine drivers are similar, but compensation systems differ. These findings suggest that firms use outsourcing to mitigate coordination costs associated with related diversification, particularly when employees in different divisions have heterogeneous incentives or ability but perform similar tasks.

Organization and Performance: Evidence from Microdata

This research examines the relationship between organization and firm performance using the U.S. taxicab industry as the empirical context for the analyses. The research demonstrates that diversification is costly in the sense that it reduces incumbent firms' competitive advantage versus start-ups, because diversification erodes the value of a firm's stock of tacit knowledge by altering the firm's routines. Furthermore, I show that while diversification leads to costly organizational change the organizational adaptations firms make in response to diversification are necessary in the sense that they are productivity enhancing.

An international taxicab evaluation: comparing Tokyo with London, New York and Paris

AbstractAn exploratory study was undertaken in order to evaluate the quality of Tokyo's taxicab industry, which provides a 24/7 door‐to‐door service for a daily average of 1.3 million people. This second paper, arising from the study, analyses the current situation in Tokyo, by using the Taxi Cab Management Model (TCMM) which identifies the key processes for managing and operating a taxicab service in any international city. The model provides a benchmark for measuring performance against other capital cities in developed nations. By comparing the results of this analysis with similar case studies of London, New York and Paris, areas of best practice are identified, as well as possible operational improvements. Copyright © 2007 John Wiley & Sons, Ltd.

Strategic management of the Tokyo taxi cab industry: an exploratory study

AbstractTaxicabs are an indispensable means of transportation in Tokyo, as they provide a 24/7 door‐to‐door service for a daily average of 1.3 million people. In 2002, legislation was introduced to abolish restrictions on the number of taxicabs on the road. This relaxation of regulation, together with the corresponding recession, raised new issues such as increasing cab numbers and reducing drivers' wages.The wide variety of stakeholders involved within the taxicab industry have conflicting positions, resulting in little agreement on the possible way forward. An exploratory study was therefore undertaken in order to investigate the management of Tokyo's taxicab operations in order to formulate strategies for improving the service. Two related papers report on the study.This paper starts by providing an understanding of the current situation, examining the roles of the major stakeholders and outlining day‐to‐day operations.Academic frameworks, for example PEST, Critical Success Factors and the Cultural Web, from the strategic management literature, are used to identify the structure of the industry and analyse the environment in which it operates.The results found that Tokyo's taxicab industry is highly efficient operationally, due to the high standard of customer service, effective driver's learning scheme and active use of IT. However, a paradoxical situation has been identified where the demand for cabs has decreased even though the available vehicles have increased. Finally, a uniform method to measure the level of taxicab service is recommended. Copyright © 2007 John Wiley & Sons, Ltd.

Taxicab regulation in Japan

This paper proposes a model of a cruising taxicab industry under laissez faire pricing and free entry, and compares it with alternative regimes including collusive fare setting, collusive restrictions on entry, or both. In the model, under laissez faire, prices are determined by Nash bargaining with complete information and lie above marginal costs. Under laissez faire pricing and free entry the average number of vacant cabs need not be efficient and could be either higher than optimal or less, depending upon the relative bargaining power of individual cabs and potential customers. Under collusive control of entry, the average number of vacant cabs will be set at the efficient level given the prices, which if set collusively will be above the laissez faire prices. These findings shed new light on the political success of cartelizing regulation of the cruising taxicab industry such as that observed in Japan. J. Japanese Int. Economies 20 (2) (2006) 288–304.

Strategic use of emerging technology: the London taxi cab industry

A special feature of London's black cab industry is the radio taxis, which provide a service for customers to pre-book travel with one of the famous black cabs. This paper examines whether the use of emerging technology can create a competitive advantage within the London radio taxi industry. A case study approach illustrates how a newcomer to the industry, Delta Cabs, through its innovative use of emerging technologies, was able to break down traditionally high barriers to entry and create a competitive advantage, redefining the competitive nature of the industry in the process. The analysis here finds that a competitive advantage has been created. However, it is unsustainable as the resources used are readily available and easily imitated by the competition. Further, it is now easier to join the industry and with the possibility of additional newcomers, the industry may experience more intense rivalry. The research concludes that competitive advantage from emerging technology can be created when certain conditions exist. Innovation — the firm has the foresight to see how the technology could be used. Opportunity — the technology is able to exploit a condition in the industry that makes a competitive advantage possible. Timing — to exploit a relatively short window of opportunity between the technology becoming economically viable and mainstream. Finally, a model is presented to assist firms in realizing competitive advantage from emerging technology. Copyright © 2005 John Wiley & Sons, Ltd.

Taxicab Economics: The Freedom to Contract for a Ride

In an era of free enterprise and exchange, the taxicab is one of the last industries held tightly to the public breast. Local laws in many cities regulate how many taxicabs are on the roads, what they charge, how old a vehicle can be, and how much English a driver must know. Nonetheless, many of the problems associated with taxicab service are just the ones such laws are designed to meet. Nearly all of us have endured the pain of not being able to hail a taxicab, 'felt' overcharged, had a fruitless exchange with a driver who could not speak the language, or ridden in a jalopy unfit for the road. Still, proponents of these laws stand by their position, warning that the consequences of removing restrictions on price and entry are even worse. This Article canvasses the features of economic regulation - price and entry constraints - to determine if local taxicab markets are unsuited for market control. This Article plans to answer several sets of questions by its end. To begin, what are the regulatory regimes in the taxicab industry? What do the regulations cover? Thus, I begin by setting out the instruments of economic regulation in the taxicab industry. Since it is often useful to illustrate by way of example, four large cities (New York, London, Washington, and Indianapolis) are discussed. In attempt to ascertain whether there are good arguments for regulating the taxicab industry, I visit the debate on economic regulation in taxicab markets. The economic rationales for price and entry regulation are considered. Taxicab markets display few, if any, of the symptoms traditionally-associated with a monopoly or an excessively competitive market. Thereafter, I turn to the non-economic rationales for economic regulation of taxicab markets. Finally, what sort of regulatory regime, if any, is appropriate? What are the options? To answer this, three alternatives to full-fledged economic regulation in taxicab markets are put forward and considered in turn. Specifically, this Part discusses briefly split-pricing, partial regulation, and deregulation as possible regimes and starting points for future analyses of taxicab markets. After reviewing the options, I conclude that deregulation is the best choice in large cities.

The effects of taxicab deregulation in rural areas of Sweden

In 1990, the taxicab industry in Sweden was deregulated. By eliminating entry and price controls, it was expected that prices would decrease and efficiency/productivity would increase. This paper examines the effects of deregulation in rural areas. We assume that the geographic setting, with respect to population composition, population density, economic life, infrastructure, transport service provision, etc., provides different conditions for taxicab services as well as different demands for taxicab services. Taxi logs and taxi meters provided data for this study. The results indicate that although not all expectations have been fulfilled, some positive effects concerning competition and productivity are noted.

The Economic Cost Of taxicab Regulation: The Case of Brisbane

The Brisbane taxicab industry is highly regulated with government imposed controls over the number of taxi licences issued and the fares to be charged. These controls protect existing licence holders from competition, allowing monopoly rents to be earned. Monopoly rents are reflected in the market price of a Brisbane taxi licence which was around $190 000 in 1993. Deregulation of the industry, were it to occur, would be expected to benefit consumers of taxicab services by an average of 51.47 per taxi ride, through a combination of an expected 15 per cent increase in the number of taxicabs, and service innovation thereby ending the 20 million dollar per annum consumer wealth loss.

The impact of taxi deregulation on small urban areas: some New Zealand evidence

In 1989 the New Zealand government deregulated the taxicab industry. Barriers to entry and centralised fare setting were abandoned. This paper examines the impact of the deregulation on industry concentration and fares in urban areas with populations of less than 100 000. While there appears to be only minor changes in concentration and fares in these areas, the direction and magnitude of fare changes, in particular, appear to be related to the size of the urban centre. Two alternative explanations are offered for this result. Evidence is presented which supports one explanation and indicates that the deregulated taxi market is competitive.

The Unanticipated Effects Of The Industry Commission’s Recommendations On The Regulation Of The Taxi Cab Industry

The Industry Commission has recommended deregulation of entry restrictions to the Australian Taxi cab industry and provided two options for achieving this. This paper considers the economic consequences of the two options and finds that they fail to achieve the Commission’s objectives. Their options are arbitrary in their construction and impact, representing a token effort to correct the current regulatory framework’s wealth transfer from consumer to licence holder. In case the Commission is intent on pursuing a gradual deregulation, this paper analyses a third option and finds it more efficient in achieving the Commission’s objectives. However, total and immediate deregulation of the industry is superior in achieving the consumer and public interest objectives espoused by the commission.

Industries and occupations at high risk for work-related homicide.

Homicide is the third leading cause of injury death in the workplace. The death certificate-based National Traumatic Occupational Fatalities surveillance system and estimates of annual employment were used to calculate average annual rates of work-related homicide for detailed industries and occupations for the nation for 1980 to 1989. Workers in the taxicab industry had the highest rate of work-related homicide (26.9 per 100,000 workers). High rates were also identified for workers providing public and private security, and in a number of retail trade and service industries. For many high-risk industries, the risk was excessive for male workers only. Differences between rates for black and nonblack workers varied across industries and occupations. Immediate efforts to protect workers, and long-term efforts to describe and study work-related homicide thoroughly and to evaluate interventions are needed.

Innovations in the regulation and operation of taxicabs

This paper reviews a number of recent innovations in the regulation and operation of taxicabs in U. S. cities. The paper discusses the growing involvement of various levels of government in public transportation programs which affect the taxicab industry, and identifies the opportunities and problems created for the industry by this increased government activity. Innovations in the types of public transportation services which can be provided by taxicabs are discussed first, followed by a review of the administrative procedures which can be employed to involve taxicab companies in publicly funded programs. Proposals for changes in the regulations governing taxicab services and prices are discussed next, with particular attention to significant regulatory changes which have been implemented in U.S. cities in recent years. Finally, innovations in the technology of taxicab operations are reviewed, including improvements to vehicles, computerized dispatching techniques, and procedures and equipment for computing fares for taxicab services.

Changes in real incomes and the demand for taxicabs

This paper comments on the possible future of the taxicab industry within the context of a familiar economic-growth model. The future capability of the taxicab industry to check increases in real costs is shown to be an important determinant in the industry's long-term viability. More importantly, the effect of rising real incomes on the demand for taxicabs is postulated also to have a strong effect on future demand. The strength of this effect and the exact position of the taxicab in the “transit tree” have important implications not only for the future demand for taxis but also for the more traditional modes of public transport.

Some promising innovations in taxicab operations

Several shared-ride passenger transportation services which could be offered by taxicabs are currently prohibited in U.S. cities by state or local regulations. Although relaxation of these regulations has been advocated on numerous occasions, little regulatory change has occurred to date. Moreover, the taxicab industry has rarely been considered as a potential provider for publicly subsidized transportation services. This paper discusses several promising innovations in taxicab service provisions and subsidy mechanisms which have been implemented or proposed recently in U.S. cities. The paper argues for more well-designed experimentation with such innovations as a means of stimulating greater interest on the part of planners, policy-makers, regulators, and public transportation operators in broadening the role of taxicabs in urban transportation.

What is Wrong with Taxicab Insurance Rates?

The insurance buyer has long been at the mercy of the seller-the insurer. With the decision of United States v. South-Eastern Underwriters Association,l a faint hope arose that at last the federal antitrust laws might be used to bring about a long needed reduction of insurance rates by breaking up the price-fixing combinations by means of which the insurers set the rates. This hope grew fainter with the passage of the McCarran Act2 and died with the passage of the various state regulatory laws. It is my purpose here to show how the existing pattern of state regulation of insurance favors the insurer to the extreme disadvantage of the insured in but a small segment of the American economy-the taxicab industry. Although the subject of my analysis is but a drop in the economic bucket, there is every reason to believe that the defects found here in state regulation will carry over, and perhaps even be accentuated, in other areas. The taxicab industry in the United States consists of more than Ioo,ooo cabs, operated by more than 2,000 corporations, partnerships, and individuals with more than 250,000 employees on their payrolls. This industry is vitally affected by the insurance rates it must pay. During the present period of the ever-upward inflationary spiral, the small taxi operator, who is operating on an almost inflexible schedule of rates, may find himself unable to meet even a slight increase in insurance rates. This situation in itself does not, of course, give the small operator any claim, as of right, to any existing, or lower, rate. This situation does make it imperative that the operator be given the advantage of either a competitively arrived at rate or, at the least, one arrived at by means of a government regulated process in which the insurer is not the dominant participant. A look at the way in which the taxicab operator secures his insurance and the method used to compute the rate would seem to be in order.