Frictions in a Competitive, Regulated Market Evidence from Taxis

45 Pages Posted: 19 Oct 2015 Last revised: 28 Oct 2015

See all articles by Guillaume R. Frechette

Guillaume R. Frechette

New York University (NYU) - Department of Economics

Alessandro Lizzeri

Princeton University - Department of Economics

Tobias Salz

MIT

Multiple version iconThere are 3 versions of this paper

Date Written: October 19, 2015

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.

Keywords: Frictions, regulation, labor supply, industry dynamics

Suggested Citation

Frechette, Guillaume R. and Lizzeri, Alessandro and Salz, Tobias, Frictions in a Competitive, Regulated Market Evidence from Taxis (October 19, 2015). Available at SSRN: https://ssrn.com/abstract=2676136 or http://dx.doi.org/10.2139/ssrn.2676136

Guillaume R. Frechette

New York University (NYU) - Department of Economics ( email )

19 West Fourth St., 6th floor
New York, NY 10012
United States

HOME PAGE: http://https://files.nyu.edu/gf35/public/html/econ.htm

Alessandro Lizzeri

Princeton University - Department of Economics ( email )

Princeton, NJ 08544-1021
United States
08544 (Fax)

Tobias Salz (Contact Author)

MIT ( email )

50 Memorial Dr
Cambridge, MA 02142
United States

HOME PAGE: http://https://economics.mit.edu/faculty/tsalz

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