This  paper makes two empirical findings and one prediction. First, it reveals the intensity and scope of the impact of ridesourcing on the conventional taxi industry. Second, it uncovers evidence that taxis may be competitive in densely populated areas.  The second finding leads to a follow-up study you can read here.

I predict that the taxi industry is here to stay in the foreseeable future.    Here is what I wrote in the conclusion:

“Beyond e-hailing, economy of scale and aggressive pricing, ridesourcing does not seem to have other means at present to drive its expansion in the market. E-hailing is no longer the secret weapon that once glorifies the cause of TNCs – it can be easily picked up by a taxi dispatcher that owns and operates its own fleet. Aggressive pricing, on the other hand, has proven at best a double-edged sword, as Uber’s recent bitter defeat in China has vividly demonstrated. The scale of TNCs, which gives outside visitors a brand to stick to, is indeed an important competitive advantage. Even this lead is not that difficult to catch up, however, if a mobile platform, presumably operated by a third party, can unify taxi dispatchers around the world. Such a platform can easily work within cities’ existing regulatory structure, rather than against it, because it utilizes a dedicated and existing fleet. It can also improve the experience of street-hailing, a decisive advantage it holds against ridesourcing, by offering customers the amenities considered only available to e-hailing users, such as paying the fare on-line and rating drivers, all in real-time. An obvious solution may be allowing customers, as they board the taxi hailed off street, to open up an electronic transaction session similar to those seen on e-haling platforms, by e.g. scanning a QR code attached to the taxis or the driver’s smart phone.”… therefore, “The revolution of ridesourcing is unlikely to eliminate the necessity of a dedicated service fleet, and for years to come we will continue to live in a world with both ridesourcing and (upgraded) taxis.”.

The Journal of Transportation Research Part C selected this paper to receive the Best Paper Award in 2018. You may download a preprint here.

Abstract:  This paper aims to examine the impact of ridesourcing on the taxi industry and explore where, when and how taxis can compete more effectively. To this end a large taxi GPS trajectory data set collected in Shenzhen, China is mined and more than 2,700 taxis (or about 18% of all registered in the city) are tracked in a period of three years, from January 2013 to November 2015, when both e-hailing and ridesourcing were rapidly spreading in the city. The long sequence of GPS data points is first broken into separate “trips”, each corresponding to a unique passenger state, an origin/destination zone, and a starting/ending time. By examining the trip statistics, we found that: (1) the taxi industry in Shenzhen has experienced a significant loss in its ridership that can be indisputably credited to the competition from ridesourcing. Yet, the evidence is also strong that the shock was relatively short and that the loss of the taxi industry had begun to stabilize since the second half of 2015; (2) taxis are found to compete more effectively with ridesourcing in peak period (6-10 AM, 5-8 PM) and in areas with high population density. (3) e-hailing helps lift the capacity utilization rate of taxis. Yet, the gains are generally modest except for the off-peak period, and excessive competition can lead to severely under-utilized capacities; and (4) ridesourcing worsens congestion for taxis in the city, but the impact was relatively mild. We conclude that a dedicated service fleet with exclusive street-hailing access will continue to co-exist with ridesourcing and that regulations are needed to ensure this market operate properly.