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Analytical Modelling 101 Models in Taxi Policy Application Presentation September 2013 Dr. James M. Cooper Dr. Dan Ha - PowerPoint PPT Presentation

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Analytical Modelling 101 Models in Taxi Policy Application Presentation September 2013 Dr. James M. Cooper Dr. Dan Hara Dr. Roger Teal Rupal Bapat. This session What is an analytical model? A history of the transportation model

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Analytical Modelling 101

Models in Taxi Policy Application


September 2013

Dr. James M. Cooper

Dr. Dan Hara

Dr. Roger Teal


  • This session

  • What is an analytical model?

  • A history of the transportation model

  • How models may be applied in the analysis of the taxi market

  • The importance of accurate data, data collection, rubbish in – rubbish out

  • Examples of application, the case of Chicago

  • Discussion

What is an analytical model?

  • Any measured repeatable analysis based on a structured review of observable facts and justifiable prediction

  • Allows for the identification and review of the impacts of policy changes, changes in market structure or public choice within the confines of known or predicted responses

  • Examples include highway analysis tools, modal split and cost models

  • Can be defined as a subset of econometric analysis, civil or transport engineering

  • The transportation model has developed since the 1952 Chicago four stage model

Transportation Models

  • Concept of predicted impacts very significant in decisions with a high cost, such as highway construction and / or with a societal impact, including decisions on licensing policy. Many countries have standard highway transportation models based on the CATS 4 stage model (Chicago / Detroit), including TSAM in the USA.

  • Different market structures require differing review, but most reflect the need to identify a (range of) interactions, circumstances affecting those interactions and changes both current and predicted.

  • Applications of the same model will also differ as no one location bears the exact same characteristics as any other. This is particularly the case in the taxi industry as the economic, social and geographic conditions can differ significantly. This argues against a concept of best practice to which we will return shortly

The Taxi Market and taxi-oriented modelling

  • The taxi market is a regulated transport market within which a range of regulations can be applied. The extent to which these are applied varies by location, with decisions often made at local level reflecting the differing local circumstances.

  • The presence of market interventions (controls) are often justified on the basis of ‘public interest’, and have a significant individual impact in their own right. The first documented British regulation originating in the Seventeenth Century. Taxi elements of the 1847 Town Police Clauses Act still remains in force in England and Wales.

  • Controls exist in three primary domains:

    • Quality Control

    • Quantity Control

    • Economic Regulation

  • Taxi models provide a justified basis in supporting, or updating, controls, and include the UK concept of Significant Unmet Demand, US concepts around Public Convenience and Necessity and cost models applied to fares.

Examples of ‘Taxi Models’, regulatory choices and impacts


  • Vehicle Standards, vehicle age, disability requirement

  • Annual vehicle testing


  • Demand Models, Significant Unmet Demand (Back-casting); Patent Demand, Latent Demand

  • Predictive Demand Models, regression models, closeness of fit and range analysis


  • Cost Model

  • Income rate, Lease Rate / Lease Rate Cap

  • Many models are applied as a reaction to an issue arising, and in isolation, eg: a cost model may be applied in response to a call for an increase in the meter rate, but this fails to account for the interactions between model elements between models. The identification of linkages may be included in a taxi market model, discussed below.

Benefits of Taxi impactsModelling

  • The correct application of the model is a (relatively) unbiased method of determining a market structure, market health, and issues within the market.

  • Informing the regulator of the state of an industry,

  • Identifying at risk areas of the industry

  • Identifying service issues

  • Correct application will also allow for the prediction of impacts arising from policy development, impacts of changes including new market circumstances, and changes in local social and economic circumstances.

The Taxi Market Model impacts

To fully describe the taxi market model, we need to define and understand linkages between the isolated elements described above. It should be noted that these will differ by location.

Increasing numbers of licenses

(Market controls applied for what reason?)

Passenger impacts, service delivery time

Passenger Impacts, vehicle quality

Driver Impacts, income may fall

Market Impacts, serves latent demand?

Changes in fare levels

(How / Why / Initiated by what?)

Passenger impacts, price elasticity of demand

Passenger impacts, cross elasticity

Driver Impacts, Income may increase

Changes in the required standards of vehicles

Passenger Impacts: Service Minima

Societal Impacts: Introduction of Accessibility

Driver / Industry Impacts: affects cost of production

The Taxi Market Model impacts


  • The identification of (appropriate) control of numbers of licenses available in the market. Assessing the impact of changes in supply / barriers to entry / market change

  • Is it appropriate to separate trip engagement methods, and can forecasting be accurate in the absence of information as applied to any one or more of: Trip hail, trip dispatch, stance engagement, app engagement

  • Demand Model

  • Stance Demand and pattern of use

  • Trip purpose

  • Trip production and trip growth forecasting

  • Trip end destinations (where trip production is ambiguous)

  • Doubly constrained O/D

  • Linkages: changes in the numbers of vehicles, whether market led or as a result of a policy decision impact on the earning potential of the industry.

The Taxi Market Model impacts


  • The measured response to market costs, partly resulting from market failure, asynchronous market conditions, or lack of full information, to reduce the potential for market exploitation, overcharging, monopolistic or oligopolistic behavior.

  • Cost Model

  • Measurement of cost of production

  • Industrial Price Index

  • Should fares be controlled, and how should the rate be set? There may appear to be a conflict between the proper operation of a market in equilibrium and a determined price. Is this the case, why do we regulate fares?

  • Market information, this is not a perfectly competitive market

  • Market failure, this is an asynchronous market

  • Market alternatives, open entry and open pricing may be appropriate

  • The market is changing. New technologies benefit some, but not all

  • Market price comparison sites popular in airline and hotel, may be applied with apps and on-line systems

The Taxi Market Model impacts


  • The determination of service minima that are justified and can be applied (and enforced). Quality controls reflecting societal expectations and values that might include, but not be limited to:

  • Vehicle Safety

  • Vehicle and Driver appearance

  • Vehicle Age

  • Vehicle type including

  • Wheelchair Accessible Vehicles

  • As many of the quality standards are widely accepted a range of controls have emerged including national testing minimum in some countries. In others the standards vary (significantly) and limit the application and effectiveness.

  • Model outcomes, including perverse impacts

  • WAV, cost impacts, that may be exaggerated, demand impacts – particularly in terms of latent demand. A more stringent vehicle testing may extend life and reduce costs.

Drawbacks, risks, dangers impacts

  • Modelling, particularly predictive modelling, makes assumptions on future performance of a market, or on behaviors that are unlikely to remain constant. Closeness of fit does not confirm a causal relationship. Rubbish In – Rubbish Out.

  • Assumptions, particularly around ‘economic person’ decisions need to be informed by a review of the values associated with certain behaviors eg: drivers waiting at airports, passengers taking taxis at night etc.

  • Social, Economic and spatial differences between cities reduce the appropriateness of defining ‘best practices’. The positive impact of a policy in one location does not guarantee its success when applied elsewhere

  • Changes are measurable and should be validated. This is not a one off exercise as a reaction to an event or issue, it is a long term commitment to fully measure and understand the industry.

  • Significant, accurate and reliable data sources, but are not fully utilized, and often not understood. Companies and apps may benefit from providing data rather than withholding (or modifying?).

Mode Split by time of day based on Public Survey impactsdata





PM Commute

Demand for Taxi and Taxi-like services impacts

Demand patterns by time of day and day of week

Income indicators impacts

Baseline Accessible scenario

Trends in Market impactsSupply

Taxi - City

FHV - City


App based ridesharing

Total (excluding rideshare)

Taxi Revenue Trips/Vehicle/Day

GIS-T Models impacts