Taxicab deregulation: Economic consequences and regulatory choices

The regulation of taxicab services is receiving an increasing amount of attention by city governments. At issue are the questions of whether local regulations should limit the supply of taxicabs and whether the regulations should control taxi fares.Recently, deregulation has become a popular suggestion; however, little empirical or theoretical evidence has existed to indicate the effects of taxi deregulations. This paper discusses these effects within a framework of eight regulatory scenarios involving different price, entry, and industry concentration factors. The analysis provides support for a public brokerage function.The preparation of this paper was supported, in part, by a contract from the Urban Mass Transportation Administration, U.S. Department of Transportation, Washington, DC.