Fickle Fingers: Ride-Hail Surge Factors and Taxi Bookings

26 Pages Posted: 25 Apr 2018  

Sumit Agarwal

Georgetown University - Department of Finance

Ben Charoenwong

National University of Singapore

Shih-Fen Cheng

Singapore Management University - School of Information Systems

Jussi Keppo

National University of Singapore - NUS Business School

Date Written: April 1, 2018

Abstract

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

Agarwal, Sumit and Charoenwong, Ben and Cheng, Shih-Fen and Keppo, Jussi, Fickle Fingers: Ride-Hail Surge Factors and Taxi Bookings (April 1, 2018). Available at SSRN: https://ssrn.com/abstract=3157378 or http://dx.doi.org/10.2139/ssrn.3157378

Sumit Agarwal

Georgetown University - Department of Finance ( email )

3700 O Street, NW
Washington, DC 20057
United States
202-687-8207 (Phone)

HOME PAGE: http://www.ushakrisna.com

Ben Charoenwong (Contact Author)

National University of Singapore ( email )

Mochtar Riady Building
15 Kent Ridge Drive
Singapore, 119245
Singapore

HOME PAGE: http://bizfaculty.nus.edu/faculty-profiles/519-ben

Shih-Fen Cheng

Singapore Management University - School of Information Systems ( email )

80 Stamford Road
Singapore, 178902
Singapore

HOME PAGE: http://www.mysmu.edu/faculty/sfcheng/

Jussi Keppo

National University of Singapore - NUS Business School ( email )

1 Business Link
Singapore, 117592
Singapore

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