COMPETITION AND SUPPLY IN LONDON TAXIS

Abstract

In recent years, the growth in taxis and hire cars in the United Kingdom has been in remarkable contrast with other sectors of local passenger transport, particularly with the buses owned and operated by the large organisations characteristic of the bus industry. Very little, however, is known about the economics of these sectors ; indeed for the hire cars, which till 1976 were completely unregulated and therefore unregistered, even the overall scale of activity is much in doubt. This paper concen trates on the comparatively well-documented London taxi trade, and presents some results of research designed to improve our economic understanding of it. We are concerned with several related issues. London's taxi trade is one of the very few in the developed world in which there is no quantity control over the entry or exit of cabs or drivers, and it is probably unique in combining this with significant quality controls?on the cab, producing a uniform special vehicle, and on the drivers, requiring high standards of previous conduct and specialised knowledge of London. The bearing of these features on the competition between the taxi trade and other modes, and on its capacity to adapt to changing economic circumstances, is of great interest in forming urban transport policy, an area which Denys Munby always con sidered of outstanding importance in the range of transport issues ([1], page 173). We comment here on : reasons for the growth trends in the trade ; taxi competition with hire cars ; and, most important? changes in the real cost of taxi output, and the main apparent reason for these. The history of London taxis shows a marked increase since the mid-fifties in the number of taxis and drivers licenced. As Table 1 shows, since 1960 this contrasts sharply with the fortunes of what are usually regarded as taxis' near public transport competitors, buses and underground. Taxis' nearest competitors are, however, hire cars. The shares of total public passenger transport held by these four modes is an important starting point for a discussion of the reasons for relative growth and decline. Unfortunately, we have relatively firm data only for 1969, when the Report of the Maxwell Stamp Committee [2] provided figures for taxis and private