IDEAS home Printed from https://ideas.repec.org/p/arx/papers/2003.02550.html
   My bibliography  Save this paper

Impact of Congestion Charge and Minimum Wage on TNCs: A Case Study for San Francisco

Author

Listed:
  • Sen Li
  • Kameshwar Poolla
  • Pravin Varaiya

Abstract

This paper describes the impact on transportation network companies (TNCs) of the imposition of a congestion charge and a driver minimum wage. The impact is assessed using a market equilibrium model to calculate the changes in the number of passenger trips and trip fare, number of drivers employed, the TNC platform profit, the number of TNC vehicles, and city revenue. Two charges are considered: (a) a charge per TNC trip similar to an excise tax, and (b) a charge per vehicle operating hour (whether or not it has a passenger) similar to a road tax. Both charges reduce the number of TNC trips, but this reduction is limited by the wage floor, and the number of TNC vehicles reduced is not significant. The time-based charge is preferable to the trip-based charge since, by penalizing idle vehicle time, the former increases vehicle occupancy. In a case study for San Francisco, the time-based charge is found to be Pareto superior to the trip-based charge as it yields higher passenger surplus, higher platform profits, and higher tax revenue for the city.

Suggested Citation

  • Sen Li & Kameshwar Poolla & Pravin Varaiya, 2020. "Impact of Congestion Charge and Minimum Wage on TNCs: A Case Study for San Francisco," Papers 2003.02550, arXiv.org, revised Feb 2021.
    • Handle: RePEc:arx:papers:2003.02550
    as

    Download full text from publisher

    File URL: http://arxiv.org/pdf/2003.02550
    File Function: Latest version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. ., 2017. "The concept of economic welfare," Chapters, in: Morality and Power, chapter 6, pages 59-68, Edward Elgar Publishing.
    2. Wang, Hai & Yang, Hai, 2019. "Ridesourcing systems: A framework and review," Transportation Research Part B: Methodological, Elsevier, vol. 129(C), pages 122-155.
    3. Li, Sen & Tavafoghi, Hamidreza & Poolla, Kameshwar & Varaiya, Pravin, 2019. "Regulating TNCs: Should Uber and Lyft set their own rules?," Transportation Research Part B: Methodological, Elsevier, vol. 129(C), pages 193-225.
    4. Terry A. Taylor, 2018. "On-Demand Service Platforms," Manufacturing & Service Operations Management, INFORMS, vol. 20(4), pages 704-720, October.
    5. Yang, Hai & Qin, Xiaoran & Ke, Jintao & Ye, Jieping, 2020. "Optimizing matching time interval and matching radius in on-demand ride-sourcing markets," Transportation Research Part B: Methodological, Elsevier, vol. 131(C), pages 84-105.
    6. Jonathan V. Hall & Alan B. Krueger, 2015. "An Analysis of the Labor Market for Uber's Driver-Partners in the United States," Working Papers 587, Princeton University, Department of Economics, Industrial Relations Section..
    7. Zhang, Xiaoning & Yang, Hai, 2004. "The optimal cordon-based network congestion pricing problem," Transportation Research Part B: Methodological, Elsevier, vol. 38(6), pages 517-537, July.
    8. Arnott, Richard, 1996. "Taxi Travel Should Be Subsidized," Journal of Urban Economics, Elsevier, vol. 40(3), pages 316-333, November.
    9. Peter Cohen & Robert Hahn & Jonathan Hall & Steven Levitt & Robert Metcalfe, 2016. "Using Big Data to Estimate Consumer Surplus: The Case of Uber," NBER Working Papers 22627, National Bureau of Economic Research, Inc.
    10. M. M. Vazifeh & P. Santi & G. Resta & S. H. Strogatz & C. Ratti, 2018. "Addressing the minimum fleet problem in on-demand urban mobility," Nature, Nature, vol. 557(7706), pages 534-538, May.
    11. May, A. D. & Milne, D. S., 2000. "Effects of alternative road pricing systems on network performance," Transportation Research Part A: Policy and Practice, Elsevier, vol. 34(6), pages 407-436, August.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Jing Gao & Sen Li, 2023. "Regulating For-Hire Autonomous Vehicles for An Equitable Multimodal Transportation Network," Papers 2301.05798, arXiv.org, revised Oct 2023.
    2. Liu, Yang & Li, Sen, 2023. "An economic analysis of on-demand food delivery platforms: Impacts of regulations and integration with ride-sourcing platforms," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 171(C).
    3. Shetty, Akhil & Li, Sen & Tavafoghi, Hamidreza & Qin, Junjie & Poolla, Kameshwar & Varaiya, Pravin, 2022. "An analysis of labor regulations for transportation network companies," Economics of Transportation, Elsevier, vol. 32(C).
    4. Di Ao & Jing Gao & Zhijie Lai & Sen Li, 2021. "Regulating Transportation Network Companies with a Mixture of Autonomous Vehicles and For-Hire Human Drivers," Papers 2112.07218, arXiv.org, revised Dec 2023.
    5. Zhang, Kenan & Nie, Yu (Marco), 2022. "Mitigating traffic congestion induced by transportation network companies: A policy analysis," Transportation Research Part A: Policy and Practice, Elsevier, vol. 159(C), pages 96-118.
    6. Zheng, Yunhan & Meredith-Karam, Patrick & Stewart, Anson & Kong, Hui & Zhao, Jinhua, 2023. "Impacts of congestion pricing on ride-hailing ridership: Evidence from Chicago," Transportation Research Part A: Policy and Practice, Elsevier, vol. 170(C).
    7. Liang, Yuan & Yu, Bingjie & Zhang, Xiaojian & Lu, Yi & Yang, Linchuan, 2023. "The short-term impact of congestion taxes on ridesourcing demand and traffic congestion: Evidence from Chicago," Transportation Research Part A: Policy and Practice, Elsevier, vol. 172(C).

    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. Li, Sen & Poolla, Kameshwar & Varaiya, Pravin, 2021. "Impact of congestion charge and minimum wage on TNCs: A case study for San Francisco," Transportation Research Part A: Policy and Practice, Elsevier, vol. 148(C), pages 237-261.
    2. Ke, Jintao & Yang, Hai & Li, Xinwei & Wang, Hai & Ye, Jieping, 2020. "Pricing and equilibrium in on-demand ride-pooling markets," Transportation Research Part B: Methodological, Elsevier, vol. 139(C), pages 411-431.
    3. Ke, Jintao & Li, Xinwei & Yang, Hai & Yin, Yafeng, 2021. "Pareto-efficient solutions and regulations of congested ride-sourcing markets with heterogeneous demand and supply," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 154(C).
    4. Zhang, Kenan & Nie, Yu (Marco), 2022. "Mitigating traffic congestion induced by transportation network companies: A policy analysis," Transportation Research Part A: Policy and Practice, Elsevier, vol. 159(C), pages 96-118.
    5. Zhou, Yaqian & Yang, Hai & Ke, Jintao & Wang, Hai & Li, Xinwei, 2022. "Competition and third-party platform-integration in ride-sourcing markets," Transportation Research Part B: Methodological, Elsevier, vol. 159(C), pages 76-103.
    6. Yang, Hai & Qin, Xiaoran & Ke, Jintao & Ye, Jieping, 2020. "Optimizing matching time interval and matching radius in on-demand ride-sourcing markets," Transportation Research Part B: Methodological, Elsevier, vol. 131(C), pages 84-105.
    7. Shetty, Akhil & Li, Sen & Tavafoghi, Hamidreza & Qin, Junjie & Poolla, Kameshwar & Varaiya, Pravin, 2022. "An analysis of labor regulations for transportation network companies," Economics of Transportation, Elsevier, vol. 32(C).
    8. Li, Sen & Yang, Hai & Poolla, Kameshwar & Varaiya, Pravin, 2021. "Spatial pricing in ride-sourcing markets under a congestion charge," Transportation Research Part B: Methodological, Elsevier, vol. 152(C), pages 18-45.
    9. Ke, Jintao & Chen, Xiqun (Michael) & Yang, Hai & Li, Sen, 2022. "Coordinating supply and demand in ride-sourcing markets with pre-assigned pooling service and traffic congestion externality," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 166(C).
    10. Zhang, Kenan & Nie, Yu (Marco), 2021. "To pool or not to pool: Equilibrium, pricing and regulation," Transportation Research Part B: Methodological, Elsevier, vol. 151(C), pages 59-90.
    11. Yang, Jie & Zhao, Daozhi & Wang, Zeyu & Xu, Chunqiu, 2022. "Impact of regulation on on-demand ride-sharing service: Profit-based target vs demand-based target," Research in Transportation Economics, Elsevier, vol. 92(C).
    12. Liu, Yang & Li, Sen, 2023. "An economic analysis of on-demand food delivery platforms: Impacts of regulations and integration with ride-sourcing platforms," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 171(C).
    13. Zhong, Yuanguang & Lan, Yibo & Chen, Zhi & Yang, Jiazi, 2023. "On-demand ride-hailing platforms with heterogeneous quality-sensitive customers: Dedicated system or pooling system?," Transportation Research Part B: Methodological, Elsevier, vol. 173(C), pages 247-266.
    14. Li, Manzi & Jiang, Gege & Lo, Hong K., 2022. "Pricing strategy of ride-sourcing services under travel time variability," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 159(C).
    15. Di Ao & Jing Gao & Zhijie Lai & Sen Li, 2021. "Regulating Transportation Network Companies with a Mixture of Autonomous Vehicles and For-Hire Human Drivers," Papers 2112.07218, arXiv.org, revised Dec 2023.
    16. Ke, Jintao & Yang, Hai & Zheng, Zhengfei, 2020. "On ride-pooling and traffic congestion," Transportation Research Part B: Methodological, Elsevier, vol. 142(C), pages 213-231.
    17. Guo, Xiaotong & Caros, Nicholas S. & Zhao, Jinhua, 2021. "Robust matching-integrated vehicle rebalancing in ride-hailing system with uncertain demand," Transportation Research Part B: Methodological, Elsevier, vol. 150(C), pages 161-189.
    18. Xu, Zhengtian & Yin, Yafeng & Chao, Xiuli & Zhu, Hongtu & Ye, Jieping, 2021. "A generalized fluid model of ride-hailing systems," Transportation Research Part B: Methodological, Elsevier, vol. 150(C), pages 587-605.
    19. Sun, Luoyi & Teunter, Ruud H. & Hua, Guowei & Wu, Tian, 2020. "Taxi-hailing platforms: Inform or Assign drivers?," Transportation Research Part B: Methodological, Elsevier, vol. 142(C), pages 197-212.
    20. Li, Manzi & Jiang, Gege & Lo, Hong K., 2023. "Optimal cancellation penalty for competing ride-sourcing platforms under waiting time uncertainty," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 174(C).

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    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:arx:papers:2003.02550. 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: arXiv administrators (email available below). General contact details of provider: http://arxiv.org/ .

    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.