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Taxi Market Deregulation: Effects on Market Outcomes, Tax Evasion and Crime

Author

Listed:
  • Harju, Jarkko
  • Kankaanranta, Ida
  • Kotakorpi, Kaisa

Abstract

We study the effects of taxi market deregulation in Finland, which removed price controls and lowered barriers to entry. The reform led to a surge in firm entry and a modest increase in exit, indicating substantial changes in market structure. Average taxi prices increased slightly according to price indices, while monthly firm-level reported sales and VAT declined by over 10 percent. Operating costs and mileage remained largely unchanged, suggesting limited demand responses. These findings point to increased tax evasion following deregulation. Consistent with this interpretation, we document a small rise in property crime, with no effects on other criminal offenses.

Suggested Citation

  • Harju, Jarkko & Kankaanranta, Ida & Kotakorpi, Kaisa, 2026. "Taxi Market Deregulation: Effects on Market Outcomes, Tax Evasion and Crime," CEPR Discussion Papers 21777, Centre for Economic Policy Research.
    • Handle: RePEc:cpr:ceprdp:21777
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    File URL: https://cepr.org/publications/DP21777
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    More about this item

    JEL classification:

    • L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods
    • L91 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Transportation: General
    • L98 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Government Policy
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance

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