Fickle Fingers: Ride-Hail Surge Factors and Taxi Bookings
26 Pages Posted: 25 Apr 2018
Date Written: April 1, 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 surge factor of ride-hailing increases taxi bookings by 8% in the same area over the next two and half hours, of which about one-third occurs contemporaneously within a half-hour interval. Increases in taxi bookings correspond to a reduction in excess taxi supply. Our estimates suggest that switching from ride-hailing services to taxi bookings during surge periods saves customers about 32% of the overall fare. We also find that surge factors have no effect on street-side hailing or taxi supply. Despite the large geographical heterogeneity in price elasticity, it is not correlated with local income.
Keywords: transportation economics, surge pricing, consumer behavior
JEL Classification: D12, R41
Suggested Citation: Suggested Citation