Performance Comparison between Surcharge Policies for Calling Taxi

Abstract

The aim of this research is to compare the performance between the fixed surcharge policy and the variable surcharge policy, based on double auction under the scenario that participants are subject to opportunity cost. Experimental economics was employed as a mean for data collection. The performance metrics considered in this research include the total trade volume, trade volume in each time, opportunity cost saving and overall efficiency. The results show that the two policies have clear distinct features. The fixed surcharge policy took less time for matching as bidders only need to make a decision to accept or reject the given price. However, this policy obtained low matched volume, high opportunity cost and low performance. This implies that there will be high number of passengers and drivers who cannot use or provide the service. On the other hand, the variable surcharge policy achieved a large matched volume, high opportunity cost saving and high overall efficiency, However, such policy required longer time to match as bidders can decide to propose their own desired price with the highest possible benefit. A comparison is also made with the current taxi application where a calling surcharge can vary with traffic condition, such as 20 Baht for normal traffic and 35 Baht under congested traffic. The policy adopted in the current taxi application can be considered as a hybrid of the fixed and the variable surcharge policies. As a result, it can attain large matched volume and fast matching. Thus a potential alternative solution to motivate the passengers and taxi drivers.