Study background
The Victorian Government, in an inquiry into the structure of the Victorian taxi industry in
2012, identified that there currently exists very little information about the demand for taxi
services, and that such a lack of information is a serious barrier to understanding the impact
of any reforms that the Inquiry recommends.
A critical missing empirical element is relevant evidence on the direct elasticities
associated with taxi fares and service levels for specific trip purposes. International evidence is limited, and what is available is quite disparate in evidence and methods used.
Table 1 summarises the few elasticities that are identified from a literature review.1 The
demand dimension is predominantly the number of trips, but there is also evidence related
to kilometres travelled and revenue received. There is a mixture of one time series
[revealed preference (RP)] study and three stated preference (SP) studies, with five studies
not providing information on the nature of the data. The time series data is aggregate
annual data and the SP data is survey data on specific taxi trips