4. DISCUSSION AND INTERPRETATION OF

THE THEORETICAL AND EMPIRICAL FINDINGS

This section of the report discusses and interprets the findings that have been reported in the study. It also presents a number of recommendations to the PSC. It is organized as follows. First, the findings on fare determination policy are analyzed. This is followed by a discussion of entry policy. Then certain other aspects of regulatory policy that do not relate directly to fare determination and entry policy are discussed; this includes the questions of shared riding, telephone service, and night service.

The PSC has four options available to it relative to fare determination policy. These options are:

1.

2.

3.

4.

To leave the existing fixed zone system
unchanged.

To modify the existing fixed zone system so as
to make the times required to pass through each
zone more equal. This would probably result in
changes in the long zones in the Northeast and
Southeast.

To adopt a mileage rate zone system of the type
suggested by Irving Schlaifer.

To adopt a fare determination system that uses
taxicab meters.

The findings made in this study will now be analyzed as they relate to each of these options. For purposes of discussion, the findings are considered separately with respect to each of the alternatives.

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There are a number of problems with the fixed zone system in Washington, D.C. Briefly they are:

1.

2.

3.

Certain trips are very unattractive to drivers
and others are unattractive to consumers.

Some customers do not know if they are being
fairly charged under the system.

From a resource allocation viewpoint, there are
some trips that customers do not take that they
would take if the rates were cost-based, and
certain others that would not be taken if rates
were cost-based.

It should be noted that these problems are not among the major ones that concern the D.C. taxi industry. Major problems that are frequently blamed on the zone system but not necessarily related to it include the following:

The above six problems will be analyzed in more detail later. They are mentioned here to make it clear in discussing fare determination systems that the problems of the D.C. taxi industry go far beyond a simple discussion of zones versus meters.

Regarding the theoretical aspects of the present zone

system, it is clear that the zones do result in boundaries that drivers wish to cross and that customers do not wish to cross, and that it may be difficult to figure out what the fares will be for certain trips. But it is equally clear from the household, on-site, and driver surveys that consumers and drivers both prefer the zone system to meters or a changed zone system. This means that, while the above-mentioned problems exist, they are either not important enough to weigh against zones in favor of meters, or consumers and drivers have reasonably adapted to them.

The surveys also indicate that the residents of Washington, its suburbs, visitors, and drivers prefer the zone system over meters. This conclusion was especially true of households that use cabs at least once every two weeks. Interestingly enough, the only group that preferred meters were those who ride cabs once a month or less. The surveys provide very strong evidence that customers who ride cabs frequently and drivers strongly prefer the zone system as it currently exists.

Another strong conclusion reached from the survey is that residents, visitors, and drivers feel that the zone system has resulted in lower fares for Washington, D.C. They further believe that a meter system does not result in low fares. The exceptions to these opinions were held by those who ride taxis less than once a week and by residents that live in the Northeast and Southeast. If the opinions of the frequent users of taxicabs are weighted more heavily by the Commission than those of the occasional riders, the zone system should be continued, perhaps with some modifications.

It might be tempting to reason that the zone system should be replaced by a meter system because of the apparent preferences of D.C. residents living in the lower income quadrants of the city. A reasonable interpretation of why these residents seem to be against

the zone system is that they feel taxi service in their areas is bad and associate the poor-quality service with the zone system. But, if other factors are causing the poor service in these areas, throwing out the zone system would not eliminate poor service and would probably result in higher fares.

The present zone system could easily be modified to provide better radio-dispatched and rush hour service. As will be discussed later in this section, the surcharge for radio-dispatched service could be increased. While this might discourage a few marginal riders, it would encourage more drivers to operate on a radio-dispatched basis. Rush hour service could be improved by offering drivers more incentives to operate during these periods through a rush hour surcharge or by making fares the higher of the present zone charge or a rate per minute. Costs go up during rush periods because of higher congestion levels that result in more time per trip; a time based rate that would be effective only during periods of actual congestion would make it more worthwhile for drivers to work during peak hours.

There are a number of other problems that were outlined at the beginning of this section which are frequently blamed on the zone system but not necessarily related to it. Driver refusals to make certain trips, whether for economic or safety reasons, will occur regardless of the fare determination system in the absence of adequate hack inspection. Poor service at National Airport is

not a problem of the PSC as it involves interstate runs. Further, the fixed zone system does not apply to airport trips. Finally, night and weekend service will be discussed at the end of this part of the report.

Summing up on the present zone system, there are some theoretical arguments against it. As was stated previously, it encourages riders to take trips that minimize the number of zones

traveled through while avoiding short trips that cross zone lines. Drivers on the other hand look for just the opposite kinds of trips. But residents who use taxi service, visitors, and drivers favor it, despite these shortcomings. In view of the strong support for a

zone system, it would appear that the adoption of a meter system would be very questionable.

There is little evidence to support changes in the fixed zone arrangement as it now exists. In theory, the zones could be changed to reflect changed traffic conditions. The objective in making changes should be to make the cost of passing through each zone as equal as possible. The Taxicab Industry Group did point out that there are problem zones in the Northeast and Southeast that should be changed. If the fixed zone system is to remain, the Commission should be watchful for conditions that will change the costs of passing through the different zones.

D.C. residents in all ridership, living, and age categories felt that the sizes of the zones are reasonable for all residents of the District. This was also true of the riders sampled in the on-site survey. The drivers, however, expressed a very different opinion. Nearly two-thirds of the drivers surveyed felt that the present sizes of the zones should be changed. Unfortunately, the survey approach did not allow the drivers to state just how they felt the zones should be changed. In all probability, the drivers feel that smaller zones would increase their incomes. But the drivers also believe that the zone system is reasonable for D.C. residents and that an adequate living can be earned by driving a taxi full-time in the District.

The type of study that would be necessary to determine