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Fickle Fingers: Ride-Hail Surge Factors and Taxi Bookings

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Document pages: 49 pages

Abstract: We study the role of ride-hailing surge factors on the allocative efficiency of taxis by combining a reduced form estimation with structural analyses using machine-learning-based demand predictions. We estimate an upper-bound of the cross-price elasticity of taxi bookings to surge factors of only 0.26, but incorporating surge factors into a demand-prediction model improves the out-of-sample accuracy by 12-15 . Our structural analyses based on a driver guidance system finds the improved accuracy reduces drivers vacant roaming times by 9.4 and increases average trips per taxi by 2.3 , suggesting the price information is valuable across platforms, even if elasticities are low.

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