Rethinking Taxi Pricing: Spurring Innovation and Choice in the Taxi Industry

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In cities across the world, taxis and ridehailing have recently joined forces, with platforms like Uber giving riders the ability to book local taxis through smartphone applications. In many cities, governments paved the way for these partnerships by reforming taxi regulations to allow taxi drivers and riders to benefit from core ridehailing mechanisms like e-hail, upfront pricing, surge, and more. In other cities, taxis on ridehailing platforms remain bound to long-standing regulations pertaining to metered fares and exclusive on-street pickups.

To date minimal research has existed to help regulators understand the changing nature of the taxi industry and to provide guidance toward industry modernization. In a new report, Access Partnership, a technology policy consulting firm based in London, seeks to fill this knowledge gap by examining the various taxi pricing models that exist throughout the world and assessing their impacts on taxi riders and drivers and urban mobility more broadly. The report, entitled Rethinking Taxi Pricing: Spurring Innovation and Choice in the Taxi Industry, first analyzes the impacts of taxi pricing policies in 3 Asian countries (South Korea, Japan, and Taiwan) and identifies a number of challenges in which rigid pricing rules have played a role, including long wait times for riders, low pay for drivers, and inadequate choice for both. It then draws lessons from 4 case study cities (San Francisco, Singapore, Vienna, and Sydney) that have implemented varying degrees of taxi fare policy reform in recent years. In these 4 cities, through policy analysis, interviews with regulators and subject matter experts, and surveys of taxi riders and drivers, the researchers found a number of advantages to allowing for the coexistence of both metered and upfront, dynamic pricing models for taxis. They found that dynamic taxi pricing could help East Asian cities overcome some of the challenges their taxi industry is facing.

Finally, the researchers recommend 6 policy levers that taxi regulators can undertake to implement greater flexibility in taxi pricing:

1. Enable flexibility and choice in regulations.
2. Develop pilot program(s) and incentivize participation.
3. Establish a framework to educate drivers.
4. Diversify the employment environment of taxi drivers.
5. Prioritize multi-stakeholder collaboration.
6. Ensure transparency.

While no single solution can be uniformly applied to every city, the report offers a comprehensive knowledge base for regulators looking to chart a path toward a more modern taxi industry.

Translated versions in Korean and Traditional Chinese are forthcoming.