The impact of the fare and industry size on cab availability is estimated in a
second equation in which the dependent variable is total taxi industry mileage
operated without passengers. These “dead miles” are spent cruising for
passengers. This variable measures how readily would-be taxi passengers can
hail a cab on the streets of Manhattan. As cruising miles increase, a person
standing at a given street corner is more likely to encounter an available cab.
Similarly, a decrease in cruising miles decreases the availability of service.
It should be noted that these two equations cannot be combined into a
simultaneous two-equation system modeling supply and demand. This is partly
because the dependent variable in the first equation is not full trip demand.
Revenue per mile measures only “met demand” manifested by passengers who
successfully hail a cab. Unfulfilled demand (passengers fruitlessly attempting to
hail a cab) is not recorded by this variable.