Strategy Selection Of The Taxi Company And Social Welfare Analysis Under The Impact Of Online Car-hailing Services

With the development of Internet technology and the popularity of smart phones,such as,"DiDi"、"YiDao" and other taxi software develop rapidly in China.In the rapid development of the online car-hailing services, the traditional taxi company and government regulation has suffered a huge impact at the same time.This paper mainly studies the strategies of the traditional taxi company and strategic choice and social welfare analysis of taxi company, and uses the standardized economic analysis method to explore the logic behind it.The results show as followings:(1)The traditional taxi company forms a monopoly when online car-hailing services does not enter the taxi company.The taxi company priced at the fixed utility of the consumer,which grabbed all consumer surplus, and charged drivers’ full income, so as to maximize their own profits.(2)In the early stage,online car-hailing services took low prices, high subsidies strategy to grab the taxi market, attracting a large number of customers and drivers into the online car-hailing services market. At this stage, because of the lower price than the taxi company, the passengers’ welfare of online car-hailing services was increased,and owners’ profits were improved;(3)The online car-hailing services company will take mixed price strategy when it has attracted enough customers to the group,.In this way,it will get more profits compared with taking mixed price strategy at the beginning.So plundering the market is the primary goal of online car-hailing services to enter the market;(4)The price was equal to the original monopoly taxi price after online car-hailing services company took increased mixed price strategy.And the profits of the market was also the same as the traditional taxi company monopoly market,which was divided up between online car-hailing services and taxi company.The price was back to the monopoly of the market price, and both the online car-hailing services and taxi company grabbed all profits of the drivers, but consumers’ welfare and drivers’ profit were damaged;(5) In the face of the impact of the online car-hailing services, the monopoly of taxi company was unable to continue.The loss of customer groups made the monopoly prices continue to be unprofitable, so taxi companies have the incentive to reduce the price of the taxi which follows online car-hailing services companies.The innovation points are as follows:(1)The improvement of the research perspective: this paper starts from the competitive relationship between the online car-hailing services and the traditional taxi company, and explores the impact of online car-hailing services to the government regulation and the traditional taxi company,and the economic logic of the game between them.(2)The improvement of the analysis tools: this paper uses a standardized economic game model, trying to find the equilibrium point between competition of online car-hailing services and traditional taxi company.Based on the above analysis, we can concluded that the main recommendations are as follows:(1)Release control of the total amount and price of traditional taxis gradually,and complete the transition of controlled by the government to the market.(2)Local restrictions on the online car-hailing services are too much,it should be deregulated, so that the online car-hailing services and taxi can compete better.With the deepening development of the market economy, the government should decentralize power to the market, so that the market can enjoy the freedom of competition and achieve the effective allocation of resources.