The Application of Smartphone Technology in the Taxi Market

The advent of technology has veritably revolutionized the taxi industry. In the past, commuters had to wait for taxis and wave to be picked, sometimes with catastrophic consequences. Women and the elderly people were the vulnerable cohorts facing attacks and rapes, and with ineffective regulators, the crimes went unpunished. However, the advent of technology and the proliferation of smartphones have led to the increased adoption of ride-share in the transportation industry. The major players include Uber, Grab Taxi, Easy Taxi, and Lyft and so on. This literature review will address the safety, service quality and completion as well marketing as applied in the taxi market.

According to Jon Terje, he points it out that the taxi industry has grappled with regulation stemming from safety, service quality and competition in his essay of Experiences with (De-)regulation in the European Taxi Industry. In his opinion, Safety is a main concern for taxi operators and their customers. Customer safety risks are multifaceted, and the safety risks associated with hiring taxi include vehicle collision or failure, sexual molestation of the customers and violence meted on them by unscrupulous drivers. The vulnerable customers are women and the elderly in society. However, due to lack of legal taxi services regulations, crimes are mainly committed by unlicensed cabs (Metropolitan Police 3). Incorporation of technology can be used to significantly reduce crimes. Also, he points that the apps used in the ride-sharing market essentially have a pertinent safety feature to enhance security in. For example, the Uber service requires an individual to register online. The profile details of the drivers and the customers are stored in the company’s database. Details include the drivers’ license number, the names, and address as well as credit card details for the customers. As such, details of the customers and the driver are recorded by the parent company offering the services including the trips made. The information recorded includes date, time, pick up/drop off location and prices. Therefore, in case violence or crimes the details of the customers and drivers provide spatial and temporal evidence. This highly increases risk detection thereby averting crime. In addition to enhancing risk detection, the app employs ‘situational crime Prevention’ criminology theory. The theory states that where efforts have been enhanced, crime capacity is highly reduced because the likelihood of the offender to be apprehended is higher (Cornish & Clarke 57). Inversely, the safety feature provides safety for the drivers as they are at a high risk of attack. OSHA revealed that taxi drivers in the USA are at a higher risk of murder on the job compared to other workers (OSHA National News Release 1).

Also, Jon indicates that the aspect of quality is highly applicable in the taxi industry. The picking up and dropping off of customers is done ‘one off’ based thus discouraging repeat custom and exemplary custom service is reduced (Bekken 20). However, smartphones have been essential towards alleviating the problem noted in the traditional taxi industry. The basis of Transportation Network Companies such as Uber is the aspect of relying on the feedback information. The customers and drivers are expected to provide feedback regarding their experience during the journey. The feedback constitutes quantitative and qualitative information regarding various aspects such as the condition of the vehicle, driver’s interaction as well as other significant services. Accountability for ‘one off’ dropped customer is obtained via feedback. The drivers’ feedback is aggregated from all the trips made through the app. As such, the drivers are compelled to increase good quality service to the customers while poor quality drivers are gradually screened out of the market because of diminishing reputation.

In the essay of Taxi Deregulation and Transaction Costs wrote by Christian Seibert, the point has been pointed out that traditional taxi pricing is regulated by fixed cost, time, and distance. Consequently, time and resources are expended in the time taken and the effort used seeking the cheapest or affordable fare (Seibert 72).This is premised on ineffective co-ordination and unhealthy competition in the taxi industry.  On the other hand, smartphones are built to solve in-coordination and imperfect competition in the taxi industry using apps. The smartphone apps enable customers search for taxis within a particular location based on the make and are driven in real time with minimal effort. In addition, the fare can be negotiated through the software upon application with the drivers or the company. In the end, comparative effort and time expended in searching for an affordable taxi is highly reduced while resolving unhealthy competition and in-coordination affecting the transportation industry. Additionally, the fixed pricing system will continue to be screened out.

In the essay of Taxi Companies Object To Uber's Inroads In Market, the author Danielle Brody describes the competition among the taxi market. She uses Uber as an example and analyses that competition continues to rival Uber for the market. Uber’s business model is similar to that of competitors including Lyft, Curb and Sidecar among others. The emergence of rides-for-hire companies together with traditional taxicabs continue to provide future competition for the company. Indeed, the customer base and driver ratings will continue to provide cost/benefits dynamics for the company. As such, technological improvement and innovation are necessary for a market where competition for rates is intense. Likewise, Uber must address concerns raised by customers regarding privacy and safety. Some potential customers are apprehensive about downloading apps since online businesses are often hacked by fraudsters for credit card information. As such, Uber should constantly upgrade her software to avert risks regarding financial and personal information. Another important concern is customer satisfaction. Despite the adoption of technology aimed at enhancing the safety of the driver and customer, there are reported cases of sexual harassment and incompetent drivers, while customer dissatisfaction has been reported arising from long waits. Consumer complaints and information from the internet should be used to improve the image of the company and increase customer satisfaction.

Smartphone technology has been successful in deregulating the taxi industry while promoting market liberalization. In essence, technology has been proven to enhance safety, improve product and service quality as well as a pricing strategy. Indeed, smartphone technology has enormous potential to streamline and improve market efficiencies. On the other hand, technological innovations should be encouraged to ensure quality services and manage competition in the taxi industry. Similarly, diversification of products and services should be promoted to safeguard companies from fluctuating customer base demand risks.






Works Cited

Bekken, Jon-Terje. "Experiences with (De-)regulation in the European Taxi Industry. The European Conference of Ministers of Transport (ECMT), round table 133." 2007. Web. 3 November 2015.

Brody, Danielle, and Evan Fallor. "Taxi Companies Object To Uber's Inroads In Market." Fairfield County Business Journal 51.23 (2015): 4. Regional Business News. Web. 31           Mar. 2016.

Cornish, Derek B. and Ronald V. Clarke. "Opportunities, Precipitators, and Criminal Decisions: A Reply to Wortley’s Critique of Situational Crime Prevention." Crime Prevention Studies 16 (2003): 41-96. Web. 3 November 2015.

ECMT. "Transport Infrastructure Charges and Capacity Choice: Report of Round Table 135, Joint Transport Research Centre of the OECD /ECMT, European Conference of Ministers of Transport." Paris, 2007. Web. 3 November 2015.

Heyes, Anthony and Catherine Liston-Heyes. "Regulation of the Taxi Industry: Some Economic Background" the European Conference of Ministers of Transport (ECMT), Round Table 133." 2007. Web. 3 November 2015.

Metropolitan, Police. "Unlicensed Minicabs Operating in Wandsworth." London: Metropolitan

Police, 2012. Web. 3 November 2015.

Panzarino, Matthew. (2013). “Leaked Uber Numbers, Which We’ve Confirmed, Point to Over $1b gross, $213m Revenue,” TechCrunch. Web. 3 November 2015.

Seibert, Christian. "Taxi Deregulation and Transaction Costs" The Journal of Economic Affairs     2.26 (2006): 71-73. Web. 3 November 2015.