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Information Provision and Search Frictions: Evidence from the Taxi Industry in Singapore

Sumit Agarwal¹; Shih-Fen Cheng²; Jussi Keppo³; Long Wang⁴; Yang Yang⁵

¹ NUS Business School, National University of Singapore, 15 Kent Ridge Drive, Singapore 119245 email: [email protected] · ² School of Computing and Information Systems, Singapore Management University, 80 Stamford Road, Singapore 178902 [email protected] · ³ NUS Business School, National University of Singapore, 15 Kent Ridge Drive, Singapore 119245 [email protected] · ⁴ School of Economics, Fudan University, 600 Guoquan Road, Yangpu District, Shanghai, China 200433; Shanghai Institute of International Finance and Economics [email protected] · ⁵ CUHK Business School, The Chinese University of Hong Kong, 12 Chak Cheung Street, N.T. Hong Kong SAR [email protected]

Abstract Search frictions and misallocation are common in decentralized transportation markets. Using novel trip-level data of taxis in Singapore, this paper examines the impactof real-time demand information at airport terminals on search frictions. The in-formation reduces taxi supply misallocation, increasing deadheading speed by 16.3%and decreasing deadheading time by 10.77%, benefiting both passengers and drivers.It raises daily earnings by $3.70 USD and adds 6.2 minutes of operational time perairport-trip taxi. Spatial spillovers are primarily observed among drivers in adjacentdistricts. Taxis from the Budget Terminal and drivers with fewer prior airport pickups benefit more from this information.

DOI

10.1162/rest.a.1632

Pages

1-47

Language

en

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