“Taxing Uber”, David R. Agrawal, Weihua Zhao2023-05 (economics, tech)⁠:

• Ride-hailing applications create new fiscal challenges for governments.

• We extend the monocentric city model to include multiple transportation modes.

• Taxes on Uber only mildly increase public transit usage.

• When Uber is subsidized as a last-mile provider, transit increases more.

• Whether Uber and public transit are substitutes or complements is a policy choice.

Ride-hailing applications create new challenges for governments providing transit services, but also create new opportunities to raise tax revenue.

To shed light on the effect of taxing or subsidizing ride-hailing services, we extend a pseudo-monocentric city model to include multiple endogenously chosen transportation modes, including ride-hailing applications and endogenous car ownership.

We show that most tax and spending programs that cities have currently adopted mildly increase public transit usage. However, the model predicts more substantial increases in public transit ridership when ride-hailing applications are subsidized as a “last-mile” provider.

Our model indicates that whether ride-hailing services and public transit are substitutes or complements is a policy choice. [cf. Pereira et al 2023]

[Keywords: ride-hailing, taxation, public transit, traffic congestion, optimal tolls]

See Also:

• Taxi Industry Regulation, Deregulation, and Reregulation: The Paradox of Market Failure

• Multi-Sided Platform Strategy, Taxation, and Regulation: A Quantitative Model and Application to Facebook § Empirical Illustration—Facebook

• Association of Rideshare-Based Transportation Services and Missed Primary Care Appointments: A Clinical Trial

• Anthropological invariants in travel behavior

• Evidence on economies of scale in local public service provision: A meta-analysis