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Taxi travel should be subsidized. (English) Zbl 0916.90092
Summary: In a first-best environment, taxi travel should be subsidized. The result derives from economies of density – doubling trips and taxis reduces waiting time. The subsidy should cover the shadow cost of taxis’ idle time, evaluated at the optimum. The paper provides a proof of the result for dispatch taxis and then discusses the practicality of its implementation. $$\copyright$$ Academic Press.

##### MSC:
 90B06 Transportation, logistics and supply chain management
##### Keywords:
urban economics; taxi travel
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