MI 2024 PU3 H2 Econs Prelim P1 QP [FINAL]

Class Adm No Candidate Name: [Turn over 2024 Preliminary Examinations Pre-University 3 ECONOMICS 9570/01 Paper 1: Case Study 28 August 2024 2 hours 30 minutes Additional Materials: Answer Booklet READ THESE INSTRUCTIONS FIRST Write your name and class on all the work you hand in. Write in dark blue or black pen on both sides of the paper. You may use a soft pencil for any diagrams or graphs. Do not use staples, paper clips, highlighters, glue or correction fluid. Answer all questions. You are reminded of the need for clear presentation in your answers. An answer booklet will be provided with this question paper. You should follow the instructions on the front cover of the answer booklet. If you need additional paper, ask the invigilator for a continuation booklet. The number of marks is given in brackets [ ] at the end of each question or part question. This question paper consists of 9 printed pages and 1 blank page. H

2 9570/01/MYE/MI/24 Answer all questions. Question 1: Ride-hailing and taxi industry in Singapore Figure 1: Average daily number of street-hail trips and ride-hail trips (annualised) *Street-hail refers to rides flagged down on the street or hired at taxi stands. Only taxis are allowed to provide street -hail rides, with metered fare calculated based on the distance travelled, and surcharges may apply. Ride-hail refers to rides that are booked (e.g. via app or call booking). Both taxis and private- hire cars are allowed to do ride-hail jobs. Ride-hail trip fare can be metered fare or a flat fare, depending on what is chosen at the point of booking. Source: Land Transport Authority Singapore, accessed on 26 July 2024 Extract 1: Taxi versus ride-hailing market in Singapore Many consumers today choose booking a car on ride -hailing platforms over taxis as they prefer the certainty of knowing the fare in advance – unlike a metered fare, and the option to compare prices between different mobile applications (apps). “The market has shifted very decisively towards ride -hailing,” said Prof Theseira. “Booking through an app is the way most consumers in Singapore want to go.” Aside from a large number of potential passengers on apps, drivers are also choosing ride - hailing due to the cheaper rental of a private car compared with a taxi. Taxi companies, too, have been adapting, as the two sides try to offer the best of both worlds to cater to different consumers. For instance, the booking platforms of taxi firms now have a flat-fee model, which mirrors the ride-hailing fare model, and gives users an option other than metered fares. Another difference between booking a car on ride-hailing apps and street-hailing a taxi is the location surcharge. To cushion the impact of fuel prices and ensure a better supply of taxis 0 100 200 300 400 500 600 2021 2022 2023 Number of trips Year Street-hail trips Ride-hail trips

3 9570/01/EYE/MI/24 [Turn over at Changi Airport and attractions at Mandai Wildlife Reserve, a hike in surcharge that was introduced more than two years ago was made permanent. Every trip starting from Changi Airport now attracts a surcharge of $8 on Mondays to Sundays, 5pm to 11.59pm, and $6 at all other times. A trip starting from attractions at Mandai Wildlife Reserve has a surcharge of $5. Industry players said that location surcharges, which also apply to other areas including Singapore Expo and Gardens by the Bay, are put in place to incentivise taxi drivers to travel there. However, there are fears that increases in such surcharges could turn even more passengers away from taxis and push them towards ride -hailing, causing more taxi drivers to also join the ride-hailing industry. Source: ChannelNewsAsia, 19 July 2024 Extract 2: Singapore taxis now run on cleaner energy Around 6 in 10 taxis on Singapore's roads are hybrid or electric vehicles (EVs), up from just 18 per cent three years ago, Senior Minister of State for Transport Amy Khor said on Monday (March 1). She told Parliament the proportion of cleaner energy vehicles rose from about 20 per cent to 35 per cent in the private-hire car sector during the same period of January 2018 to January this year. Responding to a question from Workers' Party MP Dennis Tan (Hougang), Dr Khor said the Ministry of Transport and Land Transport Authority will continue working with industry players to ensure the entire fleet makes the transition to cleaner energy vehicles. Last year, ride -hailing trips here generated an estimated 300,000 tonnes of carbon emissions, or about 4 per cent of the estimated 7 million tonnes generated by the land transport sector. Earlier this month, the Government announced several new targets and incentives to promote the use of electric vehicles as part of the inter-ministerial Green Plan 2030. They included a revised target of building 60,000 charging points across the island over the next nine years, more than double its original target of 28,000. Source: The Straits Times, 2 March 2021 Extract 3: The Competition and Consumer Commission of Singapore (CCCS) issues provisional ruling on Grab’s proposed takeover of Trans-Cab The CCCS’s provisional ruling Ride-hailing giant Grab’s proposed takeover of taxi operator Trans -Cab will significantly weaken rival ride -hailing platforms here, which in turn could lead to higher prices for passengers and drivers, said the Competition and Consumer Commission of Singapore (CCCS), Singapore’s competition watchdog. Issuing its provisional decision on the proposed acquisition after an in -depth review, the CCCS said that Grab’s purchase of Trans -Cab, which is Singapore’s third -largest taxi operator, will deprive other ride-hailing platforms of an important source of dr ivers at a time when the industry is facing a driver shortage.

4 9570/01/MYE/MI/24 If Grab’s proposed takeover of Trans-Cab goes through, Trans-Cab drivers will effectively be renting their vehicles from Grab. Data analysed by CCCS indicates that drivers who rent from vehicle fleets owned by a ride -hailing platform such as Grab tend to u se that particular platform more and are less inclined to use other rival platforms. Grab may also employ various strategies to induce Trans -Cab drivers to increase their use of Grab’s platform, which will significantly restrict rival platforms’ access to these drivers after the merger. The shortage of drivers as well as the high costs of maintaining a large vehicle fleet are likely to affect the ability of rival platforms to fulfil trip requests and, over time, make them less attractive to passengers and drivers. The CCCS added that the lower ability of rival platforms to expand the scale of ride -hailing services offered will weaken competitive constraints exerted by rival ride -hail platforms on Grab. Due to less competition in the ride-hailing industry, drivers on both Grab and rival ride- hail platforms could face higher commissions and fees, while passengers may have to contend with higher fares and fewer options. Grab and Trans-Cab’s earlier response Both Grab and Trans -cab have said that the proposed acquisition will not result in a "substantial lessening" of competition in the ride-hailing market. This is because there is minimal overlap between the two firms, a lack of prohibitive barriers to entry and the fact that both drivers and riders can easily switch to other ride-hailing platforms. Grab further shared that "digitalising Trans-cab’s fleet will improve driver productivity and taxi availability so that consumers can get a ride more easily. This will also improve driver earnings." Trans-cab drivers will also continue to have the flexibility to earn through multiple ride-hailing platforms and pick up rides through street h