Uber, Lyft and Taxi

Standing or walking in the rain is an activity best avoided. In New York City (NYC), when faced with such inclement weather, the demand for personal transportation naturally increases. During such scenarios, taxi drivers spend less time searching for customers and could thus earn a higher wage. Nonetheless, it has been a common complaint that it is difficult to find a taxi in the rain. In Brodeur and Nield (2018), we investigate whether Uber and Lyft have made it easier to get a ride int he rain. Using all Uber and Lyft rides in NYC, we show that the number of Uber rides is significantly correlated with whether it rained. The number of Uber (Lyft) rides per hour is about 22 (19) percent higher when it is raining, suggesting that dynamic pricing encourages an increase in supply. During the same time period, the number of taxi rides per hour increases by only 5 percent in rainy hours.

We then use data for all trips taken in NYC taxi cabs before and after Uber's rise in popularity, and show that the number of taxi rides, passengers and fare income all significantly decreased after Uber entered the market. Moreover, taxis do not respond differently to increased demand in rainy hours than non-rainy hours since the entrance of Uber. These finding is consistent with substitution between Uber and taxis during rainy hours.

Last, we test whether Lyft's entry in the market affected Uber. Our estimates suggest that Uber was still growing after Lyft entered the market, but that Uber rides during rainy hours decreased by about 9 percent. Our findings suggest that dynamic pricing make Lyft and Uber drivers compete for rides when demand suddenly increases, i.e., during rainy hours.

References

Brodeur, Abel and Nield, Kerry, 2018. "An Empirical Analysis of Taxi, Lyft and Uber rides: Evidence from Weather Shocks in NYC," Journal of Economic Behavior & Organization, vol. 152.

Media

Forbes: Surprise! Uber Really Does Make It Easier To Get A Taxi Ride In The Rain

IZA Newsroom: Has Uber made it easier to get a ride in the rain?

Marginal Revolution: Recommended link

uOttawa Interview