1999 Volume 16 Pages 591-600
Transactions of taxi services are taken place at particular spot markets in cities. The market externalities due to transaction costs function to come a limit number of spot markets into existence; The more suppliers gather at a market, the more customers will visit the market, and vice versa. Thus, positive feedback functions between demand and supply are key factors to understand the multiplicity of spot market equilibria. In this paper, an equilibrium model is presented to investigate agglomeration mechanisms working at local spot markets of taxi services.