A Research On Regulation Of China’s Taxi Market

The number of operating taxi vehicles is approximately 1,335,200 by 2013, and with the speed of 3%, it’s still keeping the annual growing. The taxi has become the important service industry to make the city traffic orderly and closely relate with the everyday life. However, in the meantime of rapid development, there are numbers of problems emerge in the taxi market, especially in recent years, the taxi drivers strike collective event in a continuous way, the repeated phenomenon of “Black Car”, the frequent occurrence of rejection and the difficult to take a taxi, battle of taxi software, illegal limousine business and so on. Now that the taxi is quasi-public goods, the government shall intervene in the taxi market for the purpose of achieving more economic efficiency and effectiveness of the resource allocation. However, the degree of intervening need to be negotiated for the excessive intervene will lead to lacking of competition. Abroad taxi market shape their own features according the different situation. In British, taxi can drive on the bus road, Japanese taxi are famous for excellent service and high price and the U.S take different regulation methods.In China, taxi market has been through the shortage stage of planned economy, high speed development stage of opening and revolution, and now in strict regulation stage. And the government take three measures to regulate the taxi market, including the quantity regulation, the tariff regulation, the service and the safety standard regulation. But quantity regulation lead to inadequate operation capacity and near 40% consumer need cannot be satisfied, meanwhile the quantity regulation will form the monopoly result easily. So some taxi driver provide service selectively, thus the rejection phenomenon and the difficulty of taking a taxi arise especially at the peak period. Because of the demand exceeds supply in the taxi market and the quantity regulation, the new investor choose to take a risk to form the “Black Car” group. At present, the tariff regulation that the government take lead to lacking of innovation in the taxi market. The message between the customer and taxi driver is asymmetry, so the government develop a fixed tariff for the purpose of protecting customer. However, the fixed tariff make the taxi driver and firm provide the single service, which cannot satisfy the diversified consumption demand. The service and safety standard regulation on the taxi market is necessary. Stipulating the taxi driver’s driving level and the car quality is good for guaranteeing the passenger safety.The goal of government take regulation is to form a healthy and orderly market competition environment, orderly competition can drive innovation and make the market play better part in the resource allocation. The government should guide correctly when taxi market appear new things such as the taxi software, the “special car”. Because of the city traffic transportation system and the consumption level differ from each other, every district should loosen the number regulation and implement the flexible tariff system to promote taxi market provide diversified service, and take necessary and strict safety and service standard regulation. Meanwhile, the government should accelerate develop the public transportation and the taxi market should innovate the new operation model.