Legal and Institutional Mechanism of Fare Regulation on Taxi Services in Japan: Implications of Initial Fare Reduction with Shorter Initial Distance under the Total Cost Principle

Abstract

This paper examines the theoretical foundation of fare regulation on taxi services, and reviews the past and present legal and institutional mechanism of nationwide taxi fare regulation in Japan. It points out the difficulties to apply the total cost principle to the taxi fare under the condition that various taxi fare levels are permitted. For policy implications, the attempt of the initial fare reduction with shorter initial distance based on the total cost principle is examined. The nationwide regulation system on local transport modes such as taxi service impedes flexible and appropriate policy implementations such as fare restructuring and supply adjustment.