Taxi Models Review
Taxi models review From the early 70’s many studies have been published in relation to the taxi sector. While first studies (1970- 1990) were related to the profitability of the sector and the necessity for regulation using aggregated models, later studies (1990-2010) implemented more realistic models in the taxi sector: from the most simple model of Wong developed in 1997 for a little taxi fleet until the most sophisticated model of Wong (2009) being able to simulate congestion, elasticity of demand, different user classes, external congestion and non linear costs, taking into account different market configurations. Douglas (1972) developed the first heathrow airport taxi service in an aggregated way, using economic relationships from other sectors (goods and services). Many authors (de Vany (1975), Beesley (1973), Beesley and Glaster (1983) and Schroeter (1983)) used the model proposed by Douglas for developing their models and tested them in the different market configurations.
Manski and Wright (1976), Arnott (1996) and Cairns and Liston-Heyes (1996) developed structural models, obtaining more realistic results. Yang and Wong (1997-2010c) developed accurate models, taking into account the spatial distribution of demand and supply in the city using traffic assignment models. Last models proposed by Wong et al. (2005) and Yang et al. (2010b) assume a bidirectional function taking account the willingness to pay of customers, making it much more realistic. New technologies applied to the taxi market such as GPS, GIS and GPRS were also simulated in the different models, proving their benefits and justifying their use.
Many of the models developed have been tested in different cities around the world using data from different sources. Beesley (1973) and Beesley and Gaister (1983) studied the data obtained from questionnaires in different cities in the UK, especially from London. Schroeter (1983) is the first to use data from taximeters in his model, using the data from a taxi company in Minneapolis (EEUU). Schaller (2007) uses interviews and questionnaires from taxi agents and customers in different cities of the EEUU. 3.1. Aggregated models Douglas (1972) was the precursor of the first studies related to the taxi sector. He considered a taxicab market where gatwick airport to birmingham transfers can be engaged anywhere along the city streets, with scheduled (by a regulatory authority) fares, and free entry. He concluded that the maximum revenue to the industry occurs at the point where demand is less than maximum, characterizing social welfare as an efficient but unfeasible (deficit) equilibrium. He also proved that taking into account the social welfare, the points where the number of taxi hours in service is maximized and where demand is max is the same.
The formulation proposed by Douglas (1975) has been used as a reference formulation by all the later authors. De Vany (1975) proposed solutions for a different type of markets: the Monopoly market (with entry and fares regulated), the Competitive market (with free entry and regulated fares) and the Medallion market. In the monopoly solution, the firm’s program proposed by De Vany (1975) is to maximize total benefits, while in the competitive solution the owners’ objective is to maximize their own benefits. He proved that demand is maximized subject to a zero-profit constraint. He agrees with Douglas (1972) in that the efficient price minimizes output and observes that a comparable increase in the regulated price will be more likely to expand capacity under competition than under monopoly. Beesley (1973) and Beesley and Glaister (1983) also investigated the different markets and their characteristics, trying to establish guidelines for decision makers using a model for simulating relevant inferences in the taxicab market. He identifies and analyzes the important elements and the defects of the regulation (monopoly rights, entry conditions, and fare control), introducing the external cost (congestion produced by taxi cabs) and testing his ideas in the heathrow airport to birmingham transfers data obtained from London, Liverpool, Manchester, and Birmingham.
Manski and Wright (1976), Arnott (1996) and Cairns and Liston-Heyes (1996) developed structural models, obtaining more realistic results. Yang and Wong (1997-2010c) developed accurate models, taking into account the spatial distribution of demand and supply in the city using traffic assignment models. Last models proposed by Wong et al. (2005) and Yang et al. (2010b) assume a bidirectional function taking account the willingness to pay of customers, making it much more realistic. New technologies applied to the taxi market such as GPS, GIS and GPRS were also simulated in the different models, proving their benefits and justifying their use.
Many of the models developed have been tested in different cities around the world using data from different sources. Beesley (1973) and Beesley and Gaister (1983) studied the data obtained from questionnaires in different cities in the UK, especially from London. Schroeter (1983) is the first to use data from taximeters in his model, using the data from a taxi company in Minneapolis (EEUU). Schaller (2007) uses interviews and questionnaires from taxi agents and customers in different cities of the EEUU. 3.1. Aggregated models Douglas (1972) was the precursor of the first studies related to the taxi sector. He considered a taxicab market where gatwick airport to birmingham transfers can be engaged anywhere along the city streets, with scheduled (by a regulatory authority) fares, and free entry. He concluded that the maximum revenue to the industry occurs at the point where demand is less than maximum, characterizing social welfare as an efficient but unfeasible (deficit) equilibrium. He also proved that taking into account the social welfare, the points where the number of taxi hours in service is maximized and where demand is max is the same.
The formulation proposed by Douglas (1975) has been used as a reference formulation by all the later authors. De Vany (1975) proposed solutions for a different type of markets: the Monopoly market (with entry and fares regulated), the Competitive market (with free entry and regulated fares) and the Medallion market. In the monopoly solution, the firm’s program proposed by De Vany (1975) is to maximize total benefits, while in the competitive solution the owners’ objective is to maximize their own benefits. He proved that demand is maximized subject to a zero-profit constraint. He agrees with Douglas (1972) in that the efficient price minimizes output and observes that a comparable increase in the regulated price will be more likely to expand capacity under competition than under monopoly. Beesley (1973) and Beesley and Glaister (1983) also investigated the different markets and their characteristics, trying to establish guidelines for decision makers using a model for simulating relevant inferences in the taxicab market. He identifies and analyzes the important elements and the defects of the regulation (monopoly rights, entry conditions, and fare control), introducing the external cost (congestion produced by taxi cabs) and testing his ideas in the heathrow airport to birmingham transfers data obtained from London, Liverpool, Manchester, and Birmingham.
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