Economics of

Public Policy
Lee Ya Zi
2001211958
 Topic:
COMBINED WITH THE CONCEPTS OF MONOPOLY, MONOPOLISTIC
COMPETITION AND OLIGOPOLY, ANALYZE THE COMPETITION
PATTERN OF AN INDUSTRY IN THE WORLD OR IN COUNTRY X

Industry: Ride-sharing industry

Country: Singapore
Introduction: Definitions
●Three main concepts:
○Monopoly- Industry where there is only a single seller in the market
○Monopolistic Competition- Industry where many firms offers similar
but not perfect products or services
○Oligopoly- Industry where small amount of firms in the market are
in interdependent on pricing and output
Trends on number of private hire cars
● Increasing trend of private hire
cars between years 2012-20
● 2020: 71k private-hire cars-
both self-drive and
chauffeured
● Highly due to ride-hailing
market in Singapore
● Pandemic in 2020 which
resulted in dropping numbers
Ride-sharing
● Ride-sharing: One time sharing of a vehicle, car with driver
● E.g. Platforms like Uber and Grab (popular in SEA) or taxi
● Price point ranges which is easily booked using mobile applications on
mobile services
 Overview of industry change

Taxi
Monopoly Oligopoly Monopolistic demand Oligopoly
gap
(Single Taxi (6 Taxi Competition (Taxi Companies
Company) Companies) (Taxi Companies & Uber, Ryde
& Uber) etc. )
Monopoly
Start of the First Taxi Company as a ride-sharing service
 Overview of industry change

Taxi
Monopoly Oligopoly Monopolistic demand Oligopoly
gap
(Single Taxi (6 Taxi Competition (Taxi Companies
Company) Companies) (Taxi Companies & Uber, Ryde
& Uber) etc. )
Monopoly
● General Characteristics:
○Single seller: No rivals, dominant market position with no substitutes
or other similar services or products
○Can develop naturally or be government owned, essential services?
○Barriers to entry (High): Thus difficult to penetrate
○Price maker: Seller has market control over consumers, high degree
of market power
○Economies of scale (not applicable in Private Hires)
Monopoly
●Why is this monopoly?
● Single seller: Comfort as the first taxi company in Singapore founded in
1977, thus, dominant player in industry since it is the sole provider of ride-
sharing
● Barriers to entry (High): Needs fleets of Taxi vehicles under the
company to operate
● Price maker: Comfort has the bargaining power to set price since it is a
more convenient and more comfortable form of transport compared to
buses (No trains yet)
Monopolistic
Competition
After oligopoly of Taxi Companies
 Overview of industry change

Taxi
Monopoly Oligopoly Monopolistic demand Oligopoly
gap
(Single Taxi (6 Taxi Competition (Taxi Companies
Company) Companies) (Taxi Companies & Uber, Ryde
& Uber) etc. )
Taxi demand gap
Taxi demand gap
● Though with the highest number of taxis-to-population ratio – 5.3 taxis
per 1k population, there was an issue of getting taxis during peak periods,
out-of-the-way areas and bad weather
● 6 licensed taxi operators, one dominant player (Comfort)
● Lower daily taxi utilisation rates (2006-2011 one shift-taxis increased
from 40-48.6%)
Taxi demand gap
● Problems and evolvement of taxi industry:
○ 1998: Fares deregulated
○ 2003: New Taxi operators
○ 2013: New Taxi availability standards (60-85% of taxis on roads during peak periods,
>250km per day
○ 2014: Heat sensor and camera to detect waiting passengers, Taxi-Taxi@SG app to show
available taxi locations
○ 2015: Improvements in numbers of 2013 efforts but still insufficient
● Ride-sharing platforms improved resource allocation efficiency and lowered
transaction costs for commuters  Real-time supply and demand match
Taxi-demand gap
● Therefore, by introduction of other ride-sharing platforms, this helps to
meet demand gaps in Taxi industry where there were not enough supply
during peak hours, bad weather days or places drivers rarely goes to

Taxi
demand
Oligopoly gap Monopolistic
(Taxi companies) Competition
Monopolistic Competition
● General characteristics:
○Multiple sellers: Similar products or services but not perfect
substitutes, firms are independent or not directly affected
○Barriers to entry (Low): Differentiation through pricing or
marketing
○Same or relatively low degree of market power
Monopolistic Competition
● Entering of Uber into existing Taxi industry
● Originated from 2008 in San Francisco, had branches in US, Australia and
Europe
● Early 2013: Release of UberExec service with premium cars, then mid-
range cars and Taxi
● Late 2013: Enter Singapore market with taxi-booking app plus private-
hire cars
Video- Uber’s enter into the market
Monopolistic Competition
●Why is this monopolistic
●competition?
● Multiple ride-sharing services: Taxis and other ride-sharing services like
Uber which are similar to Taxis but cannot totally replace Taxis thus
independent
● Barriers to entry (Low): Registering as private-hire car driver with Uber
or Grab was easy, various rules and standards or price were not applicable
to drivers
● Same or relatively low degree of market power: They are all price
makers
Oligopoly
Example 1
 Overview of industry change

Taxi
Monopoly Oligopoly Monopolistic demand Oligopoly
gap
(Single Taxi (6 Taxi Competition (Taxi Companies
Company) Companies) (Taxi Companies & Uber, Ryde
& Uber) etc. )
Oligopoly
● General characteristics:
○Multiple sellers: Small number of firms working together or
competing to set prices to be more profitable
○Barriers to entry (Medium): No limit on number of firms but small
enough for firm actions to be interdependent on one another
○Low or some degree of market power: Consumers determines
prices, medium to high market competition
Oligopoly- Example 1
● Initially, the monopoly nature of the ride-sharing service was dominated
by Comfort
● However, other Taxi companies entered the market, thus, the market
became an oligopoly since a few of the same sellers are offering the
same service

Taxi Companies
in the Current
Market
Oligopoly
Example 2
 Overview of industry change

Taxi
Monopoly Oligopoly Monopolistic demand Oligopoly
gap
(Single Taxi (6 Taxi Competition (Taxi Companies
Company) Companies) (Taxi Companies & Uber, Ryde
& Uber) etc. )
Oligopoly
● Other sharing economy platforms: Ryde (car-pooling) or Grab (similar
to Uber)?
● Does not own fleets of passenger cars, drivers as ‘partners’ than
employees who rent or use owned cars allowed to take bookings, not
passengers from streets or taxi stands, thus, making it taxi exclusiveness
Oligopoly- Example price comparison
 Oligopoly (List of
changes)
2013: Grab infiltrated Singapore with taxi-booking
platforms but was not recognised by Land
2018: Grab took over Uber’s Southeast Asia
business while Indonesia’s Gojek expanded into
Transport Authority (LTA) Singapore, making them the biggest rivals
2014 (November): Third party taxi-booking apps
with >20 participating taxis have to follow ‘basic
regulatory framework’  Registration certificates
from LTA, fares and service standards
2015 (1 September): ‘Light touch framework’- 2019: 0.8 million Gojek active users
Checks as regular taxi drivers, liability and Meanwhile taxis had a decreasing trend
disputes accountability, ‘fair competition’ from clear To coexist, Singapore government released Point-
fees and rules for both to-Point Passenger Transport Industry Bill: Win-
win solution
2016: Drivers had to have a Private Hire Car
Taxi drivers can sign up with any ride-hailing
Driver’s Vocational Licence (PDVL)
platform
Oligopoly
●Why is it Oligopoly?
● Multiple providers for ride-sharing services:
○ Ex. 1: Other Taxi providers (Comfort, Premier Taxis, Prime Taxi, SMRT
Corporation, Trans Cab, City Cab)
○ Ex. 2: Other ride-providing platforms like Uber or Ryde
● Low or some degree of market power & Barriers to entry (Medium): No
customers are loyal to a certain platform, choose cheapest or available option, but
base prices are typically fixed
● Close substitutability between taxis and private hires
List of references

● https://www.investopedia.com/terms/m/monopolisticmarket.asp
● https://www.investopedia.com/terms/o/oligopoly.asp
● https://www.investopedia.com/terms/m/monopoly.asp
● https://www.statista.com/statistics/953848/number-of-private-hire-cars-singapor
e/

● revisiting-the-sharing-economy-(updated-092017).pdf (nus.edu.sg)
● https://lkyspp.nus.edu.sg/docs/default-source/case-studies/revisiting-the-sharing
-economy-(updated-092017).pdf?sfvrsn=eaa8950b_0
● https://www.lta.gov.sg/content/ltagov/en/getting_around/taxis_private_hire_car
s/taxi_operators.html
● https://www.cdgtaxi.com.sg/about/milestones/
Thank you for your kind attention!

Q&A
Gustav James & Hanyang Xu (Rex)