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      Congestion Surcharge and Wage Regulation on TNCs: A Case Study for San Francisco

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          Abstract

          This paper studies the joint impact of congestion surcharge and wage regulation on transportation network companies (TNCs). These impacts are assessed by a market equilibrium model that captures the incentives of the passengers, drivers, and the platform, and accounts for the congestion externalities of the TNC vehicles. Under a wage floor on TNC drivers, we consider two schemes of congestion surcharges: (a) surcharge based on each TNC trip, and (b) surcharge based on each vehicle hour (regardless of whether the vehicle has a passenger or not). We show that both congestion surcharges can reduce the TNC ridership, but their impacts are mitigated by the wage floor and cannot significantly reduce the number of TNC vehicles. In contrast to the trip-based surcharge, we advocate the time-based congestion surcharge, which penalizes idle vehicle time and improves the vehicle occupancy. Through a case study for San Francisco, we show that the time-based congestion surcharge offers a Pareto improvement. It leads to higher passenger surplus, higher driver surplus, higher platform profits, and higher tax revenue for the city.

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          Author and article information

          Journal
          05 March 2020
          Article
          2003.02550

          http://arxiv.org/licenses/nonexclusive-distrib/1.0/

          Custom metadata
          econ.EM math.OC

          Numerical methods, Econometrics

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