The Research On Taxi Strike In China

According to the analysis of taxi industry, we find the originality that the contract can't be implemented effectively, namely the failure of self-enforce (or bilateral enforce) and of the third party enforce implement. Applying bounded rationality frame, i.e. considering ex ante the party's cognition cost and adjust cost ex post, this paper explains the phenomenon that taxi drivers of all over the country on strike, and draws several conclusions. First of all, the contract of the taxi industry can neither be implemented by themselves nor the third; the main reason of the strike is that parties' limited cognition leads to contracts are incomplete, which will require renegotiation. Taxi drivers own little power on the renegotiation, thus the distribution of the benefits are not even, but not the increased rent, unauthorized taxi and so on. Secondly, in order to acquire much more renegotiation power they adopt this extremely behavior, this strike is just a resort to acquire higher negotiation power. On one hand, this phenomenon indicates that the failure of Labor Union organization in taxi industry; on the other hand, it implicit the disadvantage of the current institution. According to the idea of the contract as a reference point, we make some advice about contract design and the institution design, i.e. taxi driver and the taxi company can write a price interval instead of single trade price. The advantage of this design is that they can negotiate in the price interval but single price when there is external noise. This price interval can be seen as a buffer area, which makes the party don't focus on the given price, and new negotiation price can deal more easily. At the same time, it can be noticed a severe outcome of this design is the party will negotiate constantly, i.e. the taxi driver will try to ask lower price but taxi company will require higher price as much as possible. This disagreement will make the equilibrium price hard to achieve. In terms of the theory, the optimal contract tradeoff between these effects, but in practice, the latter effect limits the feasibility of the contract design to some extent. How to define the range of the price interval and how to reduce the bargaining effectively is critical to the contract design.In the institution design, it's an option to build intermediate organization. It can be used to balance the benefits and deal with the discrimination, reduce the possibility of striking. It's crucial to consider the independence and the fair of the third party. Thus, it must prevent the party colluding with the third party. In current institution, it's important to improve these for better institution environment:Firstly, deal with the property rights of taxi operating license, change the license's monopoly;Secondly, it's useful to organize efficient Labor Union;Thirdly, regulating the unauthorized taxi and illegal operation, keep the driver's proper income;Fourthly, training the labor, improving the supply and demand and developing employment channel if it's impossible.