Fickle Fingers: Ride-Hail Surge Factors and Taxi Bookings
36 Pages Posted: 25 Apr 2018 Last revised: 30 Aug 2018
Date Written: August 30, 2018
Exploiting a unique feature of the Singapore taxi and ride-hailing markets, we study whether consumers switch between taxis and ride-hailing based on their relative prices. We find that a 10% increase in the ride-hailing surge factor raises taxi bookings by 4% in the same origin area in the same half-hour interval. This substitution between ride-hailing services to taxi bookings in response to the surge factor comprises around 10% of taxi booking revenues. Further, if a typical customer switches from ride-hailing services to taxi bookings whenever the surge factor is greater than one then she would save around 18% of the overall fare.
Keywords: transportation economics, surge pricing, consumer behavior
JEL Classification: D12, R41
Suggested Citation: Suggested Citation