Deregulation of the Dutch Taxi Sector



Deregulation of the Dutch Taxi Sector

Authors

JORRITSMA P, Ministry of Transport (AVV) ROUWENDAL J, MuConsult and University Wageningen Agricultural Uni and MEURS H, MuConsult, The Netherlands

Description

The Dutch taxi industry is regulated by means of an obligatory price scheme and a license system. The Netherlands is divided into a number of regions, and for each region the price and the number of licenses are determined separately. A license allows a t

Abstract

The Dutch taxi industry is regulated by means of an obligatory price scheme and a license system. The Netherlands is divided into a number of regions, and for each region the price and the number of licenses are determined separately. A license allows a taxi driver to pick up passengers in a single region and to transport them to their destiny in or outside the region. The payment of these trips has to be determined by the price in the region of origin. It is prohibited for taxi drivers to pick up passengers in any other region.

In 1996 the government has decided to change its policy with respect to the taxi industry in order to increase the role of taxis in passenger transport. The new policy is to stimulate competition in order to improve the functioning of the market. Instead of the obligatory regional tariff in 1999 a national maximum tariff will be determined by the government, and taxi drivers are allowed to charge lower prices. The maximum price will initially be set for a period of two years, and if necessary this period will be extended for another two years, possibly with a different maximum price. The taxi regions will be abandoned in 2001 so that licenses allow a driver to operate anywhere in the country The licence system will also be abandoned in order to reach a situation with free entry at minimum quality requirements.

This paper presents the results of a study of the Dutch taxi market and its reaction to the effects of the planned deregulation. It does so by integrating theoretical insights and the results of consumer and taxi company surveys into a model of the taxi industry. The model is then used to describe the situation in 1997 (when the data were collected) and to simulate the effects of the changes in the price and the licence policies.

The paper is organised as follows. In the next section some important elements of the economic analysis of the taxi market are discussed. Section 3 deals with the taxi industry on the basis of survey data. In section 4 the stated preferences of (potential) taxi passengers are analysed. Section 5 describes the model and the calibration of its parameters. In section 6 the policy simulations are discussed. Section 7 concludes.

Publisher

Association for European Transport