Taxi pricing analysis under government price regulation —A Case study of Shenzhen taxi market

Taxi price is often regulated by local government. Based on taxi market analysis, this paper develops a useful model to determine average taxi price of per ride. Make sure the customers obtain maximum consumer surplus and the taxi operators won´t lose. Then, a practical 4-step method is presented to estimate initial charge, initial distance and different distance-based charge corresponding to different distance sections. It is meaningful to prevent some taxi drivers from refusing the short-distance customer. At last, a case study of Shenzhen taxi market is introduced to illustrate the price formula and spell out this 4-step method.