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Disruptive Change in the Taxi Business: The Case of Uber

Author

Listed:
  • Judd Cramer

    (Princeton University)

  • Alan B. Krueger

    (Princeton University)

Abstract

In most cities, the taxi industry is highly regulated and utilizes technology developed in the 1940s. Ride sharing services such as Uber and Lyft, which use modern internet-based mobile technology to connect passengers and drivers, have begun to compete with traditional taxis. This paper examines the efficiency of ride sharing services vis-a-vis taxis by comparing the capacity utilization rate of UberX drivers with that of traditional taxi drivers in five cities. The capacity utilization rate is measured by the fraction of time a driver has a fare-paying passenger in the car while he or she is working, and by the share of total miles that drivers log in which a passenger is in their car. The main conclusion is that, in most cities with data available, UberX drivers spend a significantly higher fraction of their time, and drive a substantially higher share of miles, with a passenger in their car than do taxi drivers. Four factors likely contribute to the higher capacity utilization rate of UberX drivers: 1) Uber's more efficient driver-passenger matching technology; 2) the larger scale of Uber than taxi companies; 3) inefficient taxi regulations; and 4) Uber's flexible labor supply model and surge pricing more closely match supply with demand throughout the day.

Suggested Citation

  • Judd Cramer & Alan B. Krueger, 2015. "Disruptive Change in the Taxi Business: The Case of Uber," Working Papers 595, Princeton University, Department of Economics, Industrial Relations Section..
    • Handle: RePEc:pri:indrel:595
    as

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    References listed on IDEAS

    as
    1. Henry S. Farber, 2015. "Why you Can’t Find a Taxi in the Rain and Other Labor Supply Lessons from Cab Drivers," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 130(4), pages 1975-2026.
    2. Morris M. Kleiner & Alan B. Krueger, 2009. "Analyzing the Extent and Influence of Occupational Licensing on the Labor Market," Working Papers 1178, Princeton University, Department of Economics, Center for Economic Policy Studies..
    3. Morris M. Kleiner & Alan B. Krueger, 2009. "Analyzing the Extent and Influence of Occupational Licensing on the Labor Market," Working Papers 1165, Princeton University, Department of Economics, Industrial Relations Section..
    4. Morris M. Kleiner & Alan B. Krueger, 2013. "Analyzing the Extent and Influence of Occupational Licensing on the Labor Market," Journal of Labor Economics, University of Chicago Press, vol. 31(S1), pages 173-202.
    5. 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..
    Full references (including those not matched with items on IDEAS)

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    More about this item

    JEL classification:

    • J44 - Labor and Demographic Economics - - Particular Labor Markets - - - Professional Labor Markets and Occupations
    • L92 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Railroads and Other Surface Transportation
    • L98 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Government Policy

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