Articles «Previous

Moral Hazard in Leasing Contracts: Evidence from the New York City Taxi Industry

Henry S. Schneider, Cornell University

Abstract

In this study, I investigate the effects of moral hazard in leasing contracts by examining the driving outcomes of all long-term lessees and owner-operators of New York City taxis. I find that moral hazard explains a sizable fraction of lessees’ accidents, driving violations, and vehicle inspection failures. To address the possibility of endogenous contract choice, I conduct an instrumental variables analysis of the cross section of all drivers and a panel-data analysis of a subset of drivers who switched from leasing to owning.

Suggested Citation

Henry S. Schneider. "Moral Hazard in Leasing Contracts: Evidence from the New York City Taxi Industry" Journal of Law and Economics 53.4 (2010): 783-805.
Available at: http://works.bepress.com/henry_schneider/2