Abstract

This paper uses a microeconomic model to evaluate, for the case of Santiago De Chile, the most commonly used regulatory policies applied to the production of cruising taxi services. The analysis considers the influence of both, supply demand synchronization problems and consumption externalities on the passengers waiting times. The paper assumes that taxi services are produced by both taxi operators and passengers. The later provide production factors as the waiting and travel times, which makes them both producers and consumers of the services. Consistent with this, we define short run and long run production cost functions, considering factors provided by operators and passengers. It uses a generalized price function formulation in order to define the demand function for taxi runs. This function considers that the demand for taxi services does not only depend on the fare value, but also on the level of service experienced by passengers. The analysis allows obtaining interesting conclusions with respect to the social benefits and costs associated with the different regulatory policies evaluated. These conclusions should be valid for any system of urban taxis that operates similarly to that of Santiago De Chile.