Economies of Scale in the Taxicab Industry: Some Empirical Evidence from the United States

Key Points

• The aim is to investigate the economies of scale present in the taxicab industry and how trip volume affects costs.
• Analyzed cost trends of taxicab firms in the United States
• Measured average costs against number of trips per year
• Identified the point where costs start to increase
• Small taxicab firms experience economies of scale
• Average costs increase for firms completing over 75,000 trips annually
• Confirmed existence of a U-shaped cost curve in the industry