Public Transit's Effect on Ride-Hail and Taxi Usage

66 Pages Posted: 16 Dec 2018 Last revised: 22 Oct 2019

Date Written: January 19, 2019

Abstract

Policymakers across the country have been implementing regulation on ride-hail to decrease the negative externalities, such as traffic congestion, that it purportedly causes. However, there is limited evidence to predict how passengers will react to these regulations, because researchers have a limited understanding of how ride-hail fits into passengers’ overall transportation choice. This paper helps fill this gap by establishing causal evidence about the substitution patterns between ride-hail and public transit.

I measure the impact of an extension of public transit in New York City on ride-hail and yellow taxi trip volumes. I use the opening of the Second Avenue Subway (“SAS”) in 2017 as a natural experiment and proprietary data from two different New York City ride-hail providers, Uber and Via, in combination with public data on yellow taxi trips. I find the SAS caused a decrease of 9% of Uber, 29% of UberPool, and 15% of Via daily total trips in neighborhoods near the new stations. This amounts to more than 2,600 fewer daily ride-hail trips. Yellow taxi trip volume did not significantly decrease. I explore three mechanisms underlying these heterogeneous substitution patterns. First, substitution was stronger for the car services that more heavily served trips along the connecting subway route. Second, Via’s unlimited ride pass resulted in choice stickiness, ultimately delaying substitution. Finally, yellow taxi market search frictions led to underestimated substitution. I conclude by measuring the impact of the substitution on trip duration and find evidence suggesting travel time on major roadways decreased by 10 seconds.

Keywords: ride-hail, rideshare, transportation network company, taxi, public transit, natural experiment

JEL Classification: D04, D12, L91, R41

Suggested Citation

Bhatia, Natasha, Public Transit's Effect on Ride-Hail and Taxi Usage (January 19, 2019). Available at SSRN: https://ssrn.com/abstract=3258592 or http://dx.doi.org/10.2139/ssrn.3258592

Natasha Bhatia (Contact Author)

Northwestern University, Kellogg School of Management, Department of Marketing ( email )

2001 Sheridan Rd.
Evanston, IL 60208
United States

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