Frictions in a Competitive, Regulated Market: Evidence from Taxis / Guillaume R. Fréchette, Alessandro Lizzeri, Tobias Salz.

Format:

Book

Author/Creator:

Fréchette, Guillaume R.

Contributor:

National Bureau of Economic Research.

Lizzeri, Alessandro.

Salz, Tobias.

Series:

Working Paper Series (National Bureau of Economic Research) no. w24921.

NBER working paper series no. w24921

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Frictions in a Competitive, Regulated Market

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2018.

Summary:

This paper presents a dynamic general equilibrium model of a taxi market. The model is estimated using data from New York City yellow cabs. Two salient features by which most taxi markets deviate from the efficient market ideal are, first, matching frictions created by the need for both market sides to physically search for trading partners, and second, regulatory limitations to entry. To assess the importance of these features, we use the model to simulate the effect of changes in entry, alternative matching technologies, and different market density. We use the geographical features of the matching process to back out unobserved demand through a matching simulation. This function exhibits increasing returns to scale, which is important to understand the impact of changes in this market and has welfare implications. For instance, although alternative dispatch platforms can be more efficient than street-hailing, platform competition is harmful because it reduces effective density.

Notes:

Print version record

August 2018.