Abstract
The feature of the taxicab industry varies significantly from one country to another in terms of the market share, type of vehicle and its level of regulation. Its role and proportion in the whole transport system has relatively decreased as compared to the other modes of public transport such as bus and the railways. However, it still plays a predominant role in most countries. Taxis are essential services used by a certain group of people and more often than ever, are a complement to the smooth operation of public transport services either in the urban or inter-urban regions. Taxicab licensing is part of the regulations that have been applied to the taxi industry. Generally, regulations are created for achieving efficiency and ensuring equity. In this manner, the taxi regulation and its services will have an impact on the economic development of the country. To elucidate further on the taxi market and its role in economic stability of the country, the concept of ?Pareto Optimality or Efficiency' is examined. A perfectly operating market reaches a state of Pareto Efficiency when the market reaches an equilibrium state. In other words, it is a market comprising of an efficient allocation of goods and production factors. A market (in the present case, the taxicab market) does not always operate perfectly with the right price but may operate imperfectly and result in the fail of the market mechanism (i.e. market failure).
