The Design of Transportation Service Auction under Time-Cost Environment

Abstract

Motivated by the taxi refusal problem, this paper presents a new idea of bidding for taxi services through double auction. This is equivalent to a variable surcharge policy as opposed to the existing situation of a fixed surcharge paid in addition to a regular meter fare. Unlike an auction for normal commodities, time-cost is relevant in an auction for taxi services. Thus, the typical design of an auction may not be suitable for a taxi auction. This paper examines one of the problems of auction design: design of information content for the user interface. We conducted laboratory experiments to investigate the effect of different levels of information content. We found that the fixed surcharge policy was outperformed by the variable surcharge policy for most of the values of the surcharge considered. Moreover, there is a significant time-cost effect, and providing bidders with greater information leads to the lowest average transaction price.