Product details

This case investigates whether taxi drivers will differentiate their services. Bounded by fixed fares and license quota set by the government, the taxi industry finds itself hard to compete either on price or on service. The problem in Hong Kong is that most of the taxis are found at taxi stands/ranks or on the street. Price and quality competition at taxi stands and ranks is effectively prohibited, either through regulations or enforced customs, which require that passengers employ the first taxi in the queue. There are also informational problems with the passengers hailing on the street and thus they are unlikely to turn away the first taxi that comes to them as they do not know when the next taxi will arrive. Different modes of competition for taxis are identified. The findings provide a factual base for policy discussions on raising the quality of taxi services.