A second influence on revenue and demand is the taxi fare. Taxicabs are
one of several transportation options that include buses, subways, nonmedallion
car services, walking and, to a limited extent, private autos (Schaller, 1993). A
rise in the taxi fare should reduce demand for taxi service as patrons elect other
means of transportation or forego their trips altogether.
The bus/subway fare may also influence demand for taxi rides, as buses and
subways are a main transportation alternative to taxicabs for Manhattan
travelers.
Finally, it is desirable to test whether changes in the supply of taxi service
affect taxi revenue and demand. Does an expansion in industry size reduce the
number of passengers obtainable in an individual driver’s shift?