Taxi management problems with rentee-drivers

Abstract

This study incorporates the consideration of the supply of rentee-drivers at the extensive and intensive margins to fill the research gaps above. An aggregate model with a monopsony taxi owner and multiple rentee-drivers is first proposed. The monopsony taxi owner refers to the single taxi owner in the market that has no power in setting taxi trip fare and fleet size limit, but can determine the level of rent imposed on rentee-drivers and the number of taxis (medallions) owned. The aggregate model incorporates the supply of rentee-drivers at the extensive margin to investigate how the interaction between the monopsonist and rentee-drivers affects the regulation outcome and market performance. A peak-period taxi scheme design problem is then proposed to tackle the demand-supply imbalance of the taxi market during peak-periods by introducing a fleet of peak-period taxi and imposing a peak-period taxi surcharge. A time-expanded network is used to model the supply of rentee-drivers at the intensive margin. A bi-level program is formulated to determine the optimal shifts and fleet size of peak-period taxis and the peak-period taxi surcharge. Lastly, an integrated taxi model is proposed, which simultaneously considers the supply of rentee-drivers at both the extensive and intensive margins. Two bi-level programs are formulated to depict the social welfare maximization and monopsonist profit-maximization. Analytical and numerical results are given to gain insights into the supply of rentee-drivers and the regulation of taxi markets.