Topics in Urban Transportation

Paper Session

Sunday, Jan. 8, 2017 1:00 PM – 3:00 PM

Hyatt Regency Chicago, McCormick
Hosted By: Econometric Society
  • Chair: Alejandro Molnar, Vanderbilt University

Spatial Equilibrium, Search Frictions, and Efficient Regulation in the Taxi Industry

Nicholas Buchholz
,
University of Texas-Austin

Abstract

This paper analyzes the dynamic spatial equilibrium of taxicabs and shows how common taxi regulations lead to substantial inefficiencies. Taxis compete for passengers by driving to different locations around the city. Search costs ensure that optimal search behavior will still result in equilibrium frictions in the form of waiting times and spatial mismatch. Medallion limit regulations and fixed fare structures exacerbate these frictions by preventing markets from clearing on prices, leaving empty taxis in some areas, and excess demand in other areas. To analyze the role of regulation on frictions and efficiency, I pose a dynamic model of search and matching between taxis and passengers under regulation. Using a comprehensive dataset of New York City yellow medallion taxis, I use this model to compute the equilibrium spatial distribution of vacant taxis and estimate intraday demand. My estimates show that search frictions reduce welfare by $422M per year, or 62%. Counterfactual analysis reveals that existing regulations attain only 11% of the efficiency implied by a social planner's solution, while the adoption of optimized two-part tariff pricing would lead to 89% efficiency, or a welfare gain on the order of $2.1B per year. The addition of directed matching technology to an optimized regime would increase welfare even further, by approximately $2.4B per year.

The Marginal Congestion of a Taxi in New York City

Alejandro Molnar
,
Vanderbilt University
Daniel Mangrum
,
Vanderbilt University
Francis Ratsimbazafy
,
Vanderbilt University

Abstract

We exploit the introduction of a new class of restricted taxi medallion in New York City to provide a causal estimate of the impact on congestion from adding additional taxis to the city. In August 2013 the City of New York introduced a restricted class of ``boro'' (or ``green'') taxis. Boro taxis provide an equivalent service to consumers to that of ``yellow'' medallion taxis, but boro taxis are not allowed to pick up fares at airports or in Manhattan south of a boundary along East 96th St and West 110th St. We document a large spike in taxi cab activity north of the restriction boundary, driven entirely by entry from boro taxis and partially offset by retrenchment from traditional yellow medallion taxis, which face additional, localized competition. We employ this variation to study the effect of a localized increase in taxi activity on congestion: we isolate trips that consist of uptown or downtown ``runs'' along a North-South avenue, and allocate a trip's speed to the street intervals that it traverses. Whereas some trips remain entirely south or north of the boundary, the trips that traversed the boundary following the introduction of boro taxis were exposed to a substantially higher level of taxi activity on the road, resulting in speed decreases. We provide an empirical estimate of the curve between car speed and measures of additional taxi activity.

Urban Form and Driving: Evidence From United States Cities

Matthew Turner
,
Brown University

Abstract

We estimate the effect of urban form on driving. We match the best available travel survey for the US to spatially disaggregated national maps that describe population density and demographics, sectoral employment and land cover, among other things. We develop a novel approach to the sorting problem that follows from an intuitive definition of sorting and an assumption of imperfect mobility. We address the endogeneity problem by relying on measures of subterranean geology as sources of quasi-random variation in urban form. The data suggest that increases in density cause small decreases in individual driving. However, because densification policies must generally decrease population in source regions, this means that such policies can be expected to cause only tiny decreases in aggregate driving. This<br /><br />
suggests that urban planning is unlikely to be a cost effective policy response to traffic congestion, automobile related carbon emissions, or other automobile related pollution.

Frictions in a Competitive, Regulated Market: Evidence From Taxis

Alessandro Lizzeri
,
New York University
Guillaume Frechette
,
New York University
Tobias Salz
,
Columbia University

Abstract

This paper presents a dynamic general equilibrium model of a taxi market. The model is estimated using data from New York City yellow cabs. Two salient features by which most taxi markets deviate from the efficient market ideal is the need of both market sides to physically search for trading partners in the product market as well as prevalent regulatory limitations on entry in the capital market. To assess the relevance of these features we use the model to simulate the effect of changes in entry and an alternative search technology. The results are contrasted with a policy that improves the intensive margin of medallion utilization through a transfer of medallions to more efficient ownership. We use the geographical features of New York City to back out unobserved demand through a matching simulation.
JEL Classifications
  • D0 - General