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Taxis Versus Uber: The Regulations, the People, the Money and the Future

September 15, 2016
By David Sobczak

This paper, written by National Center for Policy Analysis research associate David Sobczak, examines how taxicab regulations have benefitted taxicab owners and companies, and negatively affected consumers.

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This paper, written by National Center for Policy Analysis research associate David Sobczak, examines how taxicab regulations have benefitted taxicab owners and companies, and negatively affected consumers. The paper also examines how taxicab companies are fighting transportation network companies, such as Uber, and how the fight harms consumers.

Sobczak writes that taxicab companies have benefitted from nearly a century of big-government policies.

“When motor cars became widespread early in the 20th century, the Progressive Era was in full swing,” Sobczak wrote. “Progressive politicians believed that economic competition is wasteful, and supported greater regulation of business. At the municipal government level, various progressive reforms of the taxi industry included price-fxing, limiting the number of taxicabs, mandating how fares are collected, dictating the hours of operation and eliminating competing taxi companies. In many cities, drivers were required to purchase and display medallions, signaling they were allowed to operate in that market. These regulations generated higher prices that ensured the profitability of the taxi companies and led to a black market for medallions.”

Sobczak writes that Uber and other TNCs are forcing taxicab companies to better serve consumers.

“The new ride-hailing services could profoundly affect the taxi industry,” Sobczak wrote. “If Uber continues to operate under its current model, the taxi industry will be forced to evolve to remain relevant. If they fail to do so, Uber could force them out of the market entirely or, at the very least, provide a more customer-friendly business model that is responsive to market demands. If Uber is outlawed or forced to adopt taxi industry regulations, any impetus for taxi providers to change would be diminished or lost. In that case, ride-sharers, both drivers and passengers, stand to lose.”