Crazy Idea: What if City cabs had variable pricing?

Taxi top light with 3 colored lights - red, yellow, green

What if each City cab were to have a bright green light which, when lit, indicates fares are half of the normal price? During off-peak times I can cruise for nearly as long as an hour without a fare. When it’s dead at 4 in the morning I’ll often drive by people stuck waiting for the MUNI. God knows when a bus will finally show, but the regular cost of a cab is still too much for them. What about half-price? Would that be enough to convert some people to take a cab?

Conversely, what if each cab were to have a bright red light which, when lit, indicates fares are double price? (Or, perhaps 150% of the regular fare.) At peak times it can be nearly impossible for people to hail a cab. Doubling the price would significantly cut down on demand for cabs. At this price some people would consider other options including, but not limited to, splitting cabs with strangers to save money.

Would this result in higher incomes for cab drivers during both peak and non-peak shifts? Or, would it just ‘even out’? Would this result in higher economic utility (usefulness) for customers? People may grumble at the double or 150% fare, but those that ‘really’ need a cab would be much more able to find one during peak times. And with half-price fares in the wee hours of the morning, MUNI exiles would have a safe and quick way home.

Right now we have neither variable pricing nor variable supply of taxicabs. Drivers get screwed at off-peak times, while customers get screwed during peak-times. Of course, variable pricing for taxicabs is just a thought experiment — I think it would prove too difficult to implement. But, it’s an interesting alternative to the more realistic option of variable supply, known as ‘peak medallions‘, which I strongly support.

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2 Responses to Crazy Idea: What if City cabs had variable pricing?

  1. This is a very interesting idea– do you know if any other cities have tried this? It might indeed be difficult to implement, but compared to “congestion pricing” having some variability in taxi fares should be easy. ;-)

  2. kfarr says:

    Reuben, I tried searching on Google find other examples of this idea, but I could find no other cities that have implemented such a strategy.

    However, I did see one proposal to add a surcharge to cab fares within a certain congestion zone, relating to a proposal for personal vehicle congestion fees. (Source – search for “higher taxi fares” on the page)

    That got me thinking that perhaps instead of doubling or halving the fare during peak or non-peak times respectively, the flag drop should be adjusted. In San Francisco the flag drop, the price at which the meter starts, is $3.10. Perhaps at non-peak times it should start around $1.00 while at peak times it should start around $6.00.

    It might be a more simple way of implementing variable pricing.

    Furthermore, the City could make it widely known during which hours each flag drop was valid. Say between 3 am and 5 am everyday flag drop would be $1.00, while between 5 pm and 12 pm Thu, Fri and Sat flag drop would be $6.00. All other times it would remain $3.10.

    But, again, I think variable supply (peak medallions) would be more readily implemented and more widely supported by both residents and drivers than variable pricing.

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