Taxi services with search frictions and congestion externalities |
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| Authors: | Teng Yang Hai Yang Sze Chun Wong |
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| Institution: | 1. Department of Civil and Environmental Engineering, The Hong Kong University of Science and Technology, Hong Kong, China;2. Department of Civil Engineering, The University of Hong Kong, Hong Kong, China |
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| Abstract: | Built upon the previous studies, this paper incorporates both bilateral taxi–customer search frictions and congestion externalities into the economic analyses of the equilibrium properties of taxi markets. We take account of congestion externalities by adopting a realistic distance‐based and delay‐based taxi fare structure. We first investigate comparative static effects of regulatory variables of taxi fare and fleet size on the market and then examine the properties of the Pareto‐efficient solutions for simultaneous maximization of social welfare and taxi profit in the congested market. Copyright © 2012 John Wiley & Sons, Ltd. |
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| Keywords: | taxi market search friction congestion externality Pareto efficiency market equilibrium |
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