captain cab wrote:
Quote:
If thats the case how come the fares are often more expensive in areas that do not place a limit on the numbers of taxis?
And the evidence is?
Captain Cab
I think Stu must be referring to figures produced by the T&G during the OFT aftermath. However, the issue was addressed in Myth and Reality, and Stu hasn't disputed this analysis, perhaps suggesting that he hasn't read it
Fare levels comparisonsThe T&G also points to the lower fares in restricted areas as evidence in favour of quantity controls:T&G:
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The T&G believe that the argument that ‘unofficial premium value attached to taxi vehicle licences when taxi vehicles are sold’ is irrelevant. This is because it is the welfare issues of price and quality of service which are the most relevant. The grey market argument would only be relevant if economic rent was being earned. But it would be difficult to argue that ‘economic rent’ is being earned when the average fare price for a 4 mile journey is lower in restricted areas.
We analysed data from the DfT (Taxi and Private Hire Vehicles in England and Wales 2001-02 Table 7) in regard to taxi fares for a four-mile trip. This analysis showed that the average fare for in restricted areas was £6.33 compared with £6.46 for unrestricted areas.
TDO:
The most obvious initial impression from this is that the difference in fares is hardly significant – at two per cent, this is certainly statistically insignificant in the intuitive sense, if not the technical one. The T&G trumpets this difference as “further compelling evidence that restricting taxi numbers actually works in favour of the consumer”, whereas these figures could just as well be interpreted to conclude that there is no material difference in fares between restricted and unrestricted areas.
However, this is by no means the end of the story, and for several reasons the T&G’s superficial analysis arguably misrepresents the true position, for several reasons.
First, the T&G’s analysis makes the rudimentary mistake of equating fare levels with earnings, while this is certainly not the case. It seems highly probable that taxis in more rural areas are less busy than in urban areas, and the former tend to be unrestricted, while the latter are usually restricted. Thus hourly takings (say) are likely to be higher in restricted areas, meaning that the T&G’s comparison does not show the full picture as regards income, and therefore whether ‘economic rent’ is being earned.
Secondly, the T&G make much of the fact that restricting numbers assists in ‘double-shifting’ the taxi, and figures were provided earlier to lend support to this view. Thus with largely similar fares a double-shifted vehicle will have around twice the income of the single-shifted one, rendering simple comparisons of fare levels somewhat misleading. Obviously part of the double-shifted taxi’s additional income will be required to pay the driver, but in restricted areas the driver will pay an inflated rental based on the plate premium, as was demonstrated earlier.
Thirdly, another point on the urban/rural dichotomy is that urban taxis tend to have less dead mileage, once again rendering bare comparisons of fare levels misleading – in the restricted areas taxis will tend to have less ‘dead’ mileage and time incurred without a fare in the taxi. Indeed, there is some evidence of rural authorities adopting higher tariffs on this basis, again undermining the T&G’s comparison. However, given the policy lottery evident in the UK as regards the fare-setting process, and the lack of economic coherence often evident, it often seems that fare levels might just as well be drawn from a hat, which may well explain the lack of any material difference evident in the T&G’s comparison – but taxis in restricted areas can still benefit through double-shifting and more efficient use of mileage and less time waiting for fares. Although regional trends in fare levels are evident, this could well be due to tariff-setting authorities looking to neighbouring authorities when setting fares, and this does little to make the process economically rational.
Fourthly, the fare levels used by the T&G are the local authority-set tariffs, which do not necessarily equate to actual fares charged. In many areas discounting from the set fares is widespread. For example, a report on fare negotiations in Weymouth and Portland said:
It should be pointed out that due to fierce competition the vast majority of hackney carriages and private hire vehicles charge considerably less than the set rates and charges vary from company to company.
Again, it seems likely that this discounting is more widespread in rural/unrestricted areas as opposed to urban/restricted areas – for example, the higher earnings required by the market in more urban areas will make taxi fares more sustainable, as might the greater market power afforded by the plate cartels in restricted areas. Thus actual fares charged could well be higher in urban/restricted areas.
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by all this, why not reduce fairs and get more work??? it could be logical 
