The Impact of Fuel Efficiency Improvement on Driving Behaviors of NYC Taxi Drivers

Fuel efficiency has improved because of environmental policies and high gas prices. In most cases, increased vehicle usage is associated with negative outcomes because of potentially increasing emissions. In the New York City (NYC) taxi industry, however, increased vehicle usage corresponds to increased supply, which is meaningful because of limited the numbers of permissions and the fixed fare system. I estimate the impact of fuel efficiency improvement on the driving behaviors of NYC taxi drivers by using fixed effects models. Three types of taxi driver decisions are considered: customer search distance, number of working hours, and shift participation. The results show that fuel efficiency improvement stimulates NYC taxi operators to drive further distances when searching for customers, and drivers of hybrids are more responsive to changes in gas prices. Drivers, however, do not work longer shifts when operating high efficiency vehicles; moreover the probabilities of using high or low efficiency vehicles are similar, although increases in gas prices lead to more use of hybrids.