Factors associated with crashes involving taxi owners and non-owners: A case of moral hazard and adverse selection?

• A taxi can be driven by a vehicle owner or non-owner (lessee or employee).
• We identify factors delineating between crashes involving owners and non-owners.
• We find that crashes involving non-owners are associated with more risky driving behaviors.
• Moral hazard and adverse selection may exist in the taxi leasing and employment market.

Taxis experience a higher risk of a motor vehicle crash partly because of their much higher levels of exposure on the roads. Although several studies have been conducted to examine the factors associated with the frequency and severity of taxi collisions, little research has been conducted to examine the differences in the factors associated with owner taxis and non-owner taxis. This study finds that collisions involving non-owners are more likely to be associated with poor or risky driving behaviors than collisions involving taxi vehicle owners. This result is consistent with the economic principles of moral hazard and adverse selection. Hence, policy makers responsible for traffic safety, taxi regulation or taxi operations should consider measures to reduce these market inefficiencies and improve the safety of not only taxi drivers but all road users.