IDEAS home Printed from https://ideas.repec.org/a/eee/trapol/v121y2022icp78-89.html
   My bibliography  Save this article

The effects of peak hour and congested area taxi surcharges on customers’ travel decisions: Empirical evidence and policy implications

Author

Listed:
  • Wong, R.C.P.
  • Szeto, W.Y.

Abstract

Under a stationary taxi fare structure, the varying passenger demand for taxis over time and space creates a serious shortage of taxi supply during peak hours and outside the city center. Apart from providing additional supply by increasing taxi fleet size and suppressing overall passenger demand by increasing taxi fare, it is more preferable to address the problem by means of surcharge. A surcharge can be imposed on the taxi customers who take taxis during peak hours and/or travel towards congested areas. A portion of the taxi customers may change their mode choices, arrival times, and taxi drop-off locations to avoid the additional cost. By alleviating the shortage of taxi supply, waiting time can be greatly reduced and thus the service quality can also be improved. In this study, 773 taxi customers were interviewed for their travel decisions under different hypothetical scenarios. A total of 4638 observations were used to calibrate multinomial logit and nested logit models for the analysis. The results of the logit models demonstrate that all six concerning attributes, walk and wait time, taxi travel time, public transport travel time, travel fare, early arrival time, and the number of interchanges involved, are significant to affect the taxi customers’ travel decisions. The results of market segmentation analysis further show the variations in the travel decisions of taxi customers in different segments, including gender, occupation, monthly income, and family car ownership. Sensitivity analyses were carried out, and suggestions on the implementation of a taxi surcharge scheme are provided. The calibrated models, findings, and discussions are believed to be useful for establishing a new taxi fare structure to strike a balance of spatio-temporal taxi demand and supply in the market.

Suggested Citation

  • Wong, R.C.P. & Szeto, W.Y., 2022. "The effects of peak hour and congested area taxi surcharges on customers’ travel decisions: Empirical evidence and policy implications," Transport Policy, Elsevier, vol. 121(C), pages 78-89.
    • Handle: RePEc:eee:trapol:v:121:y:2022:i:c:p:78-89
    DOI: 10.1016/j.tranpol.2022.03.008
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0967070X22000683
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.tranpol.2022.03.008?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Watson, Peter L. & Westin, Richard B., 1975. "Transferability of disaggregate mode choice models," Regional Science and Urban Economics, Elsevier, vol. 5(2), pages 227-249, May.
    2. John R. Schroeter, 1983. "A Model of Taxi Service under Fare Structure and Fleet Size Regulation," Bell Journal of Economics, The RAND Corporation, vol. 14(1), pages 81-96, Spring.
    3. Daniel Flores-Guri, 2003. "An Economic Analysis of Regulated Taxicab Markets," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 23(3_4), pages 255-266, December.
    4. Yang, Hai & Leung, Cowina W.Y. & Wong, S.C. & Bell, Michael G.H., 2010. "Equilibria of bilateral taxi-customer searching and meeting on networks," Transportation Research Part B: Methodological, Elsevier, vol. 44(8-9), pages 1067-1083, September.
    5. Wong, R.C.P. & Szeto, W.Y. & Wong, S.C., 2014. "Bi-level decisions of vacant taxi drivers traveling towards taxi stands in customer-search: Modeling methodology and policy implications," Transport Policy, Elsevier, vol. 33(C), pages 73-81.
    6. Long, Jiancheng & Szeto, W.Y. & Du, Jie & Wong, R.C.P., 2017. "A dynamic taxi traffic assignment model: A two-level continuum transportation system approach," Transportation Research Part B: Methodological, Elsevier, vol. 100(C), pages 222-254.
    7. Fifer, Simon & Rose, John & Greaves, Stephen, 2014. "Hypothetical bias in Stated Choice Experiments: Is it a problem? And if so, how do we deal with it?," Transportation Research Part A: Policy and Practice, Elsevier, vol. 61(C), pages 164-177.
    8. Yang, Hai & Wong, S. C. & Wong, K. I., 2002. "Demand-supply equilibrium of taxi services in a network under competition and regulation," Transportation Research Part B: Methodological, Elsevier, vol. 36(9), pages 799-819, November.
    9. Brownstone, David & Small, Kenneth A., 2005. "Valuing time and reliability: assessing the evidence from road pricing demonstrations," Transportation Research Part A: Policy and Practice, Elsevier, vol. 39(4), pages 279-293, May.
    10. Wai Yuen Szeto & Ryan Cheuk Pong Wong & Sze Chun Wong & Hai Yang, 2013. "A time-dependent logit-based taxi customer-search model," International Journal of Urban Sciences, Taylor & Francis Journals, vol. 17(2), pages 184-198, July.
    11. Li, Hongchang & Wang, Kun & Yu, Kemei & Zhang, Anming, 2020. "Are conventional train passengers underserved after entry of high-speed rail?-Evidence from Chinese intercity markets," Transport Policy, Elsevier, vol. 95(C), pages 1-9.
    12. Assemi, Behrang & Baker, Douglas & Paz, Alexander, 2020. "Searching for on-street parking: An empirical investigation of the factors influencing cruise time," Transport Policy, Elsevier, vol. 97(C), pages 186-196.
    13. Wong, K. I. & Wong, S. C. & Yang, Hai, 2001. "Modeling urban taxi services in congested road networks with elastic demand," Transportation Research Part B: Methodological, Elsevier, vol. 35(9), pages 819-842, November.
    14. Sun, Luoyi & Teunter, Ruud H. & Babai, M. Zied & Hua, Guowei, 2019. "Optimal pricing for ride-sourcing platforms," European Journal of Operational Research, Elsevier, vol. 278(3), pages 783-795.
    15. Zhong, Yuanguang & Yang, Tong & Cao, Bin & Cheng, T.C.E., 2022. "On-demand ride-hailing platforms in competition with the taxi industry: Pricing strategies and government supervision," International Journal of Production Economics, Elsevier, vol. 243(C).
    16. Wong, R.C.P. & Yang, Linchuan & Szeto, W.Y. & Li, Y.C. & Wong, S.C., 2020. "The effects of accessible taxi service and taxi fare subsidy scheme on the elderly's willingness-to-travel," Transport Policy, Elsevier, vol. 97(C), pages 129-136.
    17. Beesley, Michael E & Glaister, Stephen G, 1983. "Information for Regulating: The Case of Taxis," Economic Journal, Royal Economic Society, vol. 93(371), pages 594-615, September.
    18. Arnott, Richard, 1996. "Taxi Travel Should Be Subsidized," Journal of Urban Economics, Elsevier, vol. 40(3), pages 316-333, November.
    19. Hensher, David A., 2010. "Hypothetical bias, choice experiments and willingness to pay," Transportation Research Part B: Methodological, Elsevier, vol. 44(6), pages 735-752, July.
    20. Georgina Santos, 2004. "Urban Congestion Charging: A Comparison between London and Singapore," Transport Reviews, Taylor & Francis Journals, vol. 25(5), pages 511-534, November.
    21. Rose, John M. & Hensher, David A., 2018. "User satisfaction with taxi and limousine services in the Melbourne metropolitan area," Journal of Transport Geography, Elsevier, vol. 70(C), pages 234-245.
    22. Yang, Hai & Wong, S. C., 1998. "A network model of urban taxi services," Transportation Research Part B: Methodological, Elsevier, vol. 32(4), pages 235-246, May.
    23. Ulak, Mehmet Baran & Yazici, Anil & Aljarrah, Mohammad, 2020. "Value of convenience for taxi trips in New York City," Transportation Research Part A: Policy and Practice, Elsevier, vol. 142(C), pages 85-100.
    24. Cairns, Robert D. & Liston-Heyes, Catherine, 1996. "Competition and regulation in the taxi industry," Journal of Public Economics, Elsevier, vol. 59(1), pages 1-15, January.
    25. Rongxiang Su & Zhixiang Fang & Ningxin Luo & Jingwei Zhu, 2018. "Understanding the Dynamics of the Pick-Up and Drop-Off Locations of Taxicabs in the Context of a Subsidy War among E-Hailing Apps," Sustainability, MDPI, vol. 10(4), pages 1-24, April.
    26. Wong, K.I. & Wong, S.C. & Yang, Hai & Wu, J.H., 2008. "Modeling urban taxi services with multiple user classes and vehicle modes," Transportation Research Part B: Methodological, Elsevier, vol. 42(10), pages 985-1007, December.
    27. Dali Wei & Changwei Yuan & Hongchao Liu & Dayong Wu & Wesley Kumfer, 2017. "The Impact of Service Refusal to the Supply–Demand Equilibrium in the Taxicab Market," Networks and Spatial Economics, Springer, vol. 17(1), pages 225-253, March.
    28. Wong, R.C.P. & Szeto, W.Y., 2018. "An alternative methodology for evaluating the service quality of urban taxis," Transport Policy, Elsevier, vol. 69(C), pages 132-140.
    29. Jin, Fanglei & An, Kun & Yao, Enjian, 2020. "Mode choice analysis in urban transport with shared battery electric vehicles: A stated-preference case study in Beijing, China," Transportation Research Part A: Policy and Practice, Elsevier, vol. 133(C), pages 95-108.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Szeto, W.Y. & Wong, R.C.P. & Yang, W.H., 2019. "Guiding vacant taxi drivers to demand locations by taxi-calling signals: A sequential binary logistic regression modeling approach and policy implications," Transport Policy, Elsevier, vol. 76(C), pages 100-110.
    2. Li, Baicheng & Szeto, W.Y., 2019. "Taxi service area design: Formulation and analysis," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 125(C), pages 308-333.
    3. Ting Wang & Yong Zhang & Meiye Li & Lei Liu, 2019. "How Do Passengers with Different Using Frequencies Choose between Traditional Taxi Service and Online Car-Hailing Service? A Case Study of Nanjing, China," Sustainability, MDPI, vol. 11(23), pages 1-18, November.
    4. Li, Baicheng & Szeto, W.Y., 2021. "Modeling and analyzing a taxi market with a monopsony taxi owner and multiple rentee-drivers," Transportation Research Part B: Methodological, Elsevier, vol. 143(C), pages 1-22.
    5. Yang, Hai & Yang, Teng, 2011. "Equilibrium properties of taxi markets with search frictions," Transportation Research Part B: Methodological, Elsevier, vol. 45(4), pages 696-713, May.
    6. Yang, Hai & Leung, Cowina W.Y. & Wong, S.C. & Bell, Michael G.H., 2010. "Equilibria of bilateral taxi-customer searching and meeting on networks," Transportation Research Part B: Methodological, Elsevier, vol. 44(8-9), pages 1067-1083, September.
    7. Long, Jiancheng & Szeto, W.Y. & Du, Jie & Wong, R.C.P., 2017. "A dynamic taxi traffic assignment model: A two-level continuum transportation system approach," Transportation Research Part B: Methodological, Elsevier, vol. 100(C), pages 222-254.
    8. Wong, K.I. & Wong, S.C. & Yang, Hai & Wu, J.H., 2008. "Modeling urban taxi services with multiple user classes and vehicle modes," Transportation Research Part B: Methodological, Elsevier, vol. 42(10), pages 985-1007, December.
    9. Qian, Xinwu & Ukkusuri, Satish V., 2017. "Taxi market equilibrium with third-party hailing service," Transportation Research Part B: Methodological, Elsevier, vol. 100(C), pages 43-63.
    10. Fabien Leurent, 2019. "Microeconomics of a taxi service in a ring-shaped city," Working Papers hal-02047269, HAL.
    11. Wong, R.C.P. & Szeto, W.Y., 2018. "An alternative methodology for evaluating the service quality of urban taxis," Transport Policy, Elsevier, vol. 69(C), pages 132-140.
    12. Di, Xuan & Ban, Xuegang Jeff, 2019. "A unified equilibrium framework of new shared mobility systems," Transportation Research Part B: Methodological, Elsevier, vol. 129(C), pages 50-78.
    13. Pueboobpaphan, Suthatip & Indra-Payoong, Nakorn & Opasanon, Sathaporn, 2019. "Experimental analysis of variable surcharge policy of taxi service auction," Transport Policy, Elsevier, vol. 76(C), pages 134-148.
    14. Wong, R.C.P. & Szeto, W.Y. & Wong, S.C., 2014. "Bi-level decisions of vacant taxi drivers traveling towards taxi stands in customer-search: Modeling methodology and policy implications," Transport Policy, Elsevier, vol. 33(C), pages 73-81.
    15. Wenbo Zhang & Satish V. Ukkusuri & Chao Yang, 2018. "Modeling the Taxi Drivers’ Customer-Searching Behaviors outside Downtown Areas," Sustainability, MDPI, vol. 10(9), pages 1-23, August.
    16. Thorsten Heilker & Gernot Sieg, 2017. "A duopoly of transportation network companies and traditional radio-taxi dispatch service agencies," Working Papers 24, Institute of Transport Economics, University of Muenster.
    17. Yang, Hai & Wong, S. C. & Wong, K. I., 2002. "Demand-supply equilibrium of taxi services in a network under competition and regulation," Transportation Research Part B: Methodological, Elsevier, vol. 36(9), pages 799-819, November.
    18. Yu, Xinlian & Gao, Song & Hu, Xianbiao & Park, Hyoshin, 2019. "A Markov decision process approach to vacant taxi routing with e-hailing," Transportation Research Part B: Methodological, Elsevier, vol. 121(C), pages 114-134.
    19. Hai Yang & Min Ye & Wilson Hon-Chung Tang & Sze Chun Wong, 2005. "A Multiperiod Dynamic Model of Taxi Services with Endogenous Service Intensity," Operations Research, INFORMS, vol. 53(3), pages 501-515, June.
    20. Nourinejad, Mehdi & Ramezani, Mohsen, 2020. "Ride-Sourcing modeling and pricing in non-equilibrium two-sided markets," Transportation Research Part B: Methodological, Elsevier, vol. 132(C), pages 340-357.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:trapol:v:121:y:2022:i:c:p:78-89. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/30473/description#description .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.