Taxi vs. Uber

By | 20.8.2016

In their research, Cramer and Krueger managed to compile a unique dataset on the utilization of taxi and UberX drivers in 5 cities in the U.S. From the comparison they conducted, it seems that UberX driver are able to operate with higher efficiency (with an exception for New York City, where both taxi and UberX drivers achieve similar results) than taxi drivers. In particular, the authors created two different measures to assess the efficiency and both measures indicate a similar pattern and conclusion. UberX drivers have a passenger in their car for a larger fraction of driven miles than taxi drivers.

Apart from a more efficient driver-­passenger matching technology brought about by using Uber’s internet ­based system, the reasons lie, as they argued, also in inefficient taxi regulations. Moreover, the authors mentioned two more potential reasons – a more flexible labor supply model and a larger scale of Uber. Even without knowing what the actual reason for the differences in performance is, the resulting effect is significant and questions the current taxi system.

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Source: Cramer, J., & Krueger, A. B. (2016). Disruptive change in the taxi business: The case of Uber. The American Economic Review, 106(5), 177-182. Available here.

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