Licensing in taxi market

Résumé du document

The aim of this study is to provide insight into two different experiences with both regulation and deregulation policies, in order to give an outline of the extent to which the expectations of these policies are fulfilled. The study was carried out in two European capital cities: Brussels and Stockholm. These cities were selected on the basis of the dissimilarities in the degree of regulating taxi policies. In fact, while Stockholm has deregulated this sector for 10 years, Brussels is going toward a more and more regulated policy. By analysing the present market structure in each city and its consequences, we will try to answer the following questions...

Extraits

[...] Moreover, the quality of services is likely to be difficult to say in a word whether “worsened” or “improved” because the result differed in each criterion (waiting time, price, quality of services The most remarkable feature in this respect relates to the taxi density in both cities. Compared to regulated countries, deregulated countries are market by considerably higher taxi density. Stockholm and Brussels seem to confirm this trend. Stockholm's taxi density is definitely high: 4 taxis per 1,000 residents against 1.3 in Brussels. [...]

[...] By contrast, the most common argument against fare control is that market will produce a more efficient solution on the price competition than the average cost pricing associated with a regulated fare. Additional argument is that there is no guarantee for the regulator to set the right level of price Quality Regulation It has been argued that regulations for ensuring high quality of service and improved safety are necessary to protect the public. Such regulations are imposed on the standard of vehicles and quality of drivers. There is almost no argument against the quality regulation. [...]

[...] As regards Brussels, the following maximum tariffs are set: Starting tariff: FB 95 3.11 ) Tariff first perimeter zone: FB 40 per km 1.31 ) Tariff second perimeter zone: FB 80 per km 2.62 ) Waiting tariff: FB 800 per hour 26.20 ) Night raise: FB 75 per fare 2.46 ) Furthermore, the tariff changes from riding to waiting tariff when the speed of the car falls below 15 km per hour. Since tariffs are maximum tariffs, the taxi business is permitted to charge lower tariffs, and passengers could thus negotiate. But this is certainly not common practice (very incidental) in the municipalities. [...]

[...] The price of licence values reflects a scarcity value. In markets where quantity restrictions are abolished licence values are extinguished. In the same way, it appears plausible that increases to taxi numbers will lower licence values. Where entry is restricted and fares are fixed, taxi licences trade on secondary markets. This is actually the case in Brussels where it exists a black market dedicated to taxi licenses trading. In Stockholm, however, prices of taxi rides do not vary a great deal between the various providers. [...]

[...] The number of taxi rides decreases and the market is facing an excess supply of taxis, which may emphasize the two main negative external effects taxi triggers, namely, traffic congestion and air pollution Effect on profitability Although one may expect that adequate taxi turnover may be achieved in a strictly regulated city, Brussels seems to prove the contrary. In fact, taxi turnover is that low in Brussels that the situation barely seems economically viable. Such situation might threat the industry itself. [...]