Day-time taxi fares should be reduced to stimulate demand, the Competition Authority implied yesterday. Calling for a better quality service and the implementation of a systematic review process, the authority said fares should be rebalanced to reduce excess supply and ensure adequate service at all times. Fares should increase at times of the day when customers queue and decrease when ranks are overcrowded.

The recommendation was included in a submission to the Department of the Environment and Local Government on the quality and regulation of the taxi service. It followed the liberalisation of the taxi market two years ago and two fare increases since December.

The authority noted there were more than 8,000 taxis in Dublin, compared to 2,720 in advance of liberalisation. Although queues at ranks sometimes remained long, this was not a good indicator of the level of service because waiting times had reduced and more people were queueing than before.

It said: "While the freeing of entry is extremely welcome and has benefited customers, more systematic regulatory reform is required if the taxi market is to function efficiently and deliver the maximum benefit to customers, the taxi industry and the overall economy."

It added: "Quality standards should be tightened and enforced strictly. Free entry, intense competition and the incentive to cut costs may reduce vehicle quality. Accordingly, standards need to be enforced more strictly to maintain any given level of quality. Examples of such enforcement should include regular maintenance checks, spot checks and meaningful fines for offenders."