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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-Ã -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
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    References listed on IDEAS

    as
    1. 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.
    2. 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, Oxford University Press, vol. 130(4), pages 1975-2026.
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    1. repec:eee:transa:v:106:y:2017:i:c:p:1-11 is not listed on IDEAS
    2. repec:oup:oxford:v:33:y:2017:i:4:p:541-571. is not listed on IDEAS
    3. repec:eee:transa:v:101:y:2017:i:c:p:11-21 is not listed on IDEAS
    4. Scott Duke Kominers & Alexander Teytelboym & Vincent P Crawford, 2017. "An invitation to market design," Oxford Review of Economic Policy, Oxford University Press, vol. 33(4), pages 541-571.
    5. repec:gam:jsusta:v:10:y:2018:i:4:p:1256-:d:142083 is not listed on IDEAS
    6. repec:eee:transb:v:105:y:2017:i:c:p:559-578 is not listed on IDEAS
    7. Brodeur, Abel & Nield, Kerry, 2016. "Has Uber Made It Easier to Get a Ride in the Rain?," IZA Discussion Papers 9986, Institute for the Study of Labor (IZA).
    8. 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..
    9. Jessica Lynn Peck, 2017. "New York City Drunk Driving After Uber," Working Papers 13, City University of New York Graduate Center, Ph.D. Program in Economics.
    10. Matthew Sinclair, 2016. "Fair and Efficient Regulation of the Sharing Economy," Economic Affairs, Wiley Blackwell, vol. 36(2), pages 204-211, June.
    11. Haucap, Justus, 2018. "Big Data aus wettbewerbs- und ordnungspolitischer Perspektive," DICE Ordnungspolitische Perspektiven 96, University of Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    12. Graham Palmer, 2017. "Energetic Implications of a Post-industrial Information Economy: The Case Study of Australia," Biophysical Economics and Resource Quality, Springer, vol. 2(2), pages 1-9, June.
    13. repec:eee:jbvent:v:32:y:2017:i:5:p:461-475 is not listed on IDEAS
    14. MORIKAWA Masayuki, 2017. "Impact of Foreign Tourists on Productivity in the Accommodation Industry: A panel data analysis," Discussion papers 17106, Research Institute of Economy, Trade and Industry (RIETI).
    15. Haucap, Justus & Heimeshoff, Ulrich, 2017. "Ordnungspolitik in der digitalen Welt," DICE Ordnungspolitische Perspektiven 90, University of Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    16. Haucap, Justus & Kehder, Christiane, 2018. "Welchen Ordnungsrahmen braucht die Sharing Economy?," DICE Ordnungspolitische Perspektiven 94, University of Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    17. Alejandro Tirachini & Andres Gomez-Lobo, 2017. "Estabilidad Macroeconómica y Crecimiento Económico: Mitos y Realidades," Working Papers wp457, University of Chile, Department of Economics.

    More about this item

    JEL classification:

    • L92 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Railroads and Other Surface Transportation

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