Question

In: Economics

1. On-demand taxi service is a relatively new phenomenon that many believe is potentially disruptive of...

1. On-demand taxi service is a relatively new phenomenon that many believe is potentially disruptive of the traditional transport services in Ghana. Explain at least five features of this phenomenon that differentiates it from the traditional transport services and also makes it preferable.

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Expert Solution

On-demand taxi have made structural changes to an d industry that functioned much the same way it did decades ago. Individuals need of a taxi had to physically wave at a taxi or call a local service to reserve a car at least half an hour prior to the pickup time. These on demand taxis have several distinct advantages and disadvantages over traditional taxis.

  • Convenient and Cashless:- Instead of chasing down a car at street or waitng half an hour for a called service a e- hail app users are able to hail a car at any location and have it arrive within minutes. passengers credit card is make use for payment.
  • Competitive pricing:- Generally on-demand taxis are less expensive than traditional taxus and car services.
  • Safer and more Flexible for Drivers :- Drivers working with on-demand taxis ensure safety for the passengers and themselves. Because the transaction is cash less a driver doest face any unpaid fares. Consistently low ratings or report of unsafe behaviour towards drivers can cause deactivation of account.
  • 'Surge pricing' for on-demand taxis or 'prime time pricing' is controversial and a major annoyance for the customers. Surge pricing is a method of pricing in the lower market that involves raising or lowering of price depending on supply and demand. Here it deals with how many cars are available ( supply ) and how many passengers want to ride in them( demand). Depending on the intensity of demand the prices for the services may increase by several percentage.
  • Negetive impact of price competition:- Price competition can be destructive for any industry. In case of on-demand taxis, they are directly competing with existing traditional car services for both customers and drivers.This has led to drop in taxi medallion and black car prices in cities. That is good for drivers but bad fir for traditional taxi and cae service groups.

Rahul Sunny answered 7 months ago
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