Non-Adoption of Dynamic Pricing in Traditional Taxi Dispatch Organizations

Abstract

Dynamic pricing (DP) was introduced into the taxi industry through ride-sharing platforms such as Uber. Prior research has identified benefits of DP for ride-sharing organizations, drivers and consumers. A legal reform in Finland in July 2018 made DP of taxi rides legally possible. However, even though traditional Finnish dispatch organizations have adopted different technology (e.g., ride-hailing apps), they have not adopted DP. To find out the reasons for the non-adoption, we conducted a qualitative case study among Finnish dispatch organizations. Utilizing IT artifact as an analytical lens, we identified ten aspects related to the technology, the structure and the context within which DP is embedded that help explain why it has not been adopted. We propose that DP in the taxi industry should be seen more broadly than just as “Uber-type” real-time DP, as it has been viewed in previous literature. Our findings have implications for research and practice.