Optimal taxi market control operated with a flexible initial fare policy

Efficient operations and optimal social resource allocation are important for commercial vehicle operations (CVO). Particularly for the taxi business, the main objective of the taxi authority board is to keep the taxi vacancy rate under an optimal level. The flexible pricing mechanism is a useful tool in achieving the presented objective. To match market demand and to hold on an optimal vacancy rate in the taxi business, this study establishes a stochastic optimal control law with a flexible initial fare. For verification and evaluation, six scenarios have been conducted for simulation. The result shows that the proposed model can work satisfactorily under every circumstance.