When taxi drivers meet dynamic pricing: A lesson from Singapore's JustGrab program

• Main Authors: CHENG, Shih-Fen, HSU, Wen-Tai, LI, Jing
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2023
• Subjects: Price mechanism; Dynamic pricing; Taxi drivers; JustGrab; Databases and Information Systems; Data Science
• Online Access: https://ink.library.smu.edu.sg/soe_research/2794; https://ink.library.smu.edu.sg/context/soe_research/article/3792/viewcontent/ssrn_4757476.pdf
• Institution: Singapore Management University

This paper studies how dynamic pricing influences taxi drivers’ behaviors using a unique event, the inception of the JustGrab program in Singapore in 2017, which introduces dynamic pricing to some, but not all, taxi drivers. This is the first time in history that traditional taxi drivers have access to dynamic pricing. Using data covering the universe of taxi trips before and after the inception of JustGrab, we find that there is spatial reallocation that directs more taxi drivers to the previously less-served areas, that there is also a temporal reallocation that directs more taxi drivers to rush hours, as well as lunch hours, and that there is an overall increase in labor supply. Our results suggest that taxi drivers benefit from access to dynamic pricing. As the proliferation of app-based ride-hailing technology has encountered various degrees of opposition from the taxi industry in cities across the globe, such a lesson from JustGrab is worth attention.