Entry controls in taxi regulation: Implications of US and Canadian experience for taxi regulation and deregulation

This paper assesses the effects of entry regulation and deregulation on taxicab availability and service quality based on the experiences of 43 cities and counties in the United States and Canada. The analysis shows that entry controls have quite different impacts in the two basic markets served by taxicabs: the telephone order (dispatch) market and the cab stand/street hail market. Without entry controls, the cab stand and street hail market experiences an oversupply of cabs, leading to deterioration of vehicle and driver quality. Applied to the dispatch market, however, entry restrictions often lead to deficiencies in taxicab availability. The paper reviews the effectiveness of regulatory approaches for each market and for cities with substantial trip volumes in both markets. Approaches include two-tier systems, flexible forms of entry control, company-level entry qualifications, geographic restrictions and service requirements. These approaches and implications for regulation are discussed.