Taxing Uber

66 Pages Posted: 20 Oct 2020 Last revised: 27 Apr 2021

See all articles by David R. Agrawal

David R. Agrawal

University of Kentucky - James W. Martin School of Public Policy and Administration; University of Kentucky - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Weihua Zhao

University of Louisville - College of Business - Department of Economics

Date Written: August 31, 2020

Abstract

Transportation network companies (TNCs) create new challenges for governments providing transit services, but also create new opportunities to raise tax revenue. To shed light on the effect of taxing TNCs, we extend a pseudo-monocentric city model to include multiple endogenously chosen transportation modes, including ride-hailing applications. We show that most tax and spending programs that cities have currently adopted only mildly increase transit usage. However, our model predicts significant increases in public transit ridership when TNCs are subsidized as a "last-mile" provider. Our model indicates that whether TNCs and public transit are substitutes or complements is a policy choice.

Keywords: ride-hailing, taxation, public transit, traffic congestion, optimal tolls

JEL Classification: C60, H25, H71, L88, L98, R41, R51

Suggested Citation

Agrawal, David R. and Zhao, Weihua, Taxing Uber (August 31, 2020). Available at SSRN: https://ssrn.com/abstract=3684019 or http://dx.doi.org/10.2139/ssrn.3684019

David R. Agrawal (Contact Author)

University of Kentucky - James W. Martin School of Public Policy and Administration ( email )

433 Patterson Office Tower
Lexington, KY 40506-0027
United States
859-257-8608 (Phone)

HOME PAGE: http://www.uky.edu/~drag222/

University of Kentucky - Department of Economics ( email )

Lexington, KY 40506
United States

HOME PAGE: http://www.uky.edu/~drag222/

CESifo (Center for Economic Studies and Ifo Institute) ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

HOME PAGE: http://www.uky.edu/~drag222/

Weihua Zhao

University of Louisville - College of Business - Department of Economics ( email )

Louisville, KY 40292
United States

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