(An) empirical investigation on the impact of ride-sharing on taxi industry

Abstract

With the rapid growth of sharing economy, there has been growing debate on the disruptive nature of the sharing economy to threaten traditional industry. This study examines the impact on taxi industry of ride-sharing services, which is one of the largest business models in sharing economy. Using comprehensive data on Uber and taxi transactions in New York City over the period April to September 2014, our findings demonstrate that ride-sharing services are negatively associated with the demand for taxis, after controlling for simultaneity and endogeneity. When Uber transactions increase by 10%, the number of taxi pickups decreases by 0.12%. Interestingly, this effect is contingent upon market and customer segments. The negative effect of Uber on taxis is even larger in Manhattan, high-income areas and off-peak hour, where taxi availability is high, than outer boroughs, low-income areas and rush hour, potentially expanding transportation options for previously underserved markets. Furthermore, ride-sharing services take more the demand of taxi customers, who are price-sensitive, in group, and paying by cash. Implications for practice and research are discussed.