The economics of cheating in the taxi market

Amihai Glazer*, Refael Hassin

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

Abstract

Because taxi fares usually increase with the length of the ride and because many passengers are ignorant of which is the most direct route to their destinations, taxicab operators have an incentive to cheat their customers by taking circuitous routes. In this paper we provide a theoretical analysis of such cheating. We find that a monopolist will cheat its customers more than would a competitive firm; that an increase in the number of taxicabs will increase the extent of cheating; and that in the absence of a certain form of nonlinear pricing, operators will either cheat some customers or refuse to serve others.

Original languageEnglish
Pages (from-to)25-31
Number of pages7
JournalTransportation Research Part A: General
Volume17
Issue number1
DOIs
StatePublished - Jan 1983

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