The Rise of the Rideshare

By Jason Cox Source: Washington Post

For much of the last century, the taxicab industry has been an integral part of transportation in American urban centers—from New York City, to Washington D.C. and San Francisco. Yellow cabs are sometimes just as big a part of a city’s scenery as their respective skylines, and are often essential to their very operation. Nationwide, taxi and limousine services constitute a $6 billion a year industry; one that greatly fears change. In recent years, companies such as Uber and Lyft have capitalized on the widespread use of smartphones, leading to innovative ways of more efficiently offering services with the development of new ridesharing apps.

The taxi industry has grown largely decrepit over the last few decades. Overregulation has led to the formation of uncompetitive cartels, and consumers have borne the cost of excessive government intervention. Providing taxi services should include one of the lowest barriers to entry of nearly any industry; all that should be reasonably required is a driver’s license and a set of wheels, effectively meaning most people would be eligible to attempt the profession. For most jurisdictions however, this is not the case. Cities generally issue limited numbers of “medallions,” licenses that allow one to contract their services as a cabbie. The cost of these medallions has risen over the last few decades from lows well below $100,000, spiraling to over $1 million today in New York. This artificially created scarcity, which only exists due to government intervention, leads to large corporations being the only entity which can enter the market, and as always, leaves consumers with the short stick.

Entrepreneurs have sought to remedy this problem in the form of new smartphone based services. Uber, the most widespread of these companies, operates an app that allows potential riders to request a driver, gives you an estimated quote of their fee, and delivers you to your requested destination. This format comes with all sorts of options for consumers, including the ability to rate their drivers, digitally bill credit cards, and choose which types of vehicles they prefer to travel in. The benefits of this extend far past consumer choice; there is some evidence to suggest that ridesharing services could significantly reduce drunk driving, in addition to the general benefit of competition always reducing costs and improving service.

Like any other antiquated and entrenched industry, instead of trying to attempt new methods of competing with the rise of ridesharing companies, taxi cartels have decided to lobby the government to restrict, if not outright ban, their competition. Across the country legislation is being passed to further regulate ridesharing services out of existence. Instead of seeking reductions in regulation, taxi companies prefer to simply bring ridesharing on equally unfair footing. This was recently seen in Virginia, which blocked ridesharing services from operation earlier this year, before finally reversing course with added restrictions. Only last month did the first airport decide to allow rideshares at their terminals, and the service has been outright banned in other cities worldwide, such as Berlin.

Despite complaints of their practice of “price surging,” amid additional claims of safety concerns, ridesharing services like Uber have proven to be a popular choice for many consumers. Instead of standing in the way of new means of providing for one another, we should be ensuring aggressive and ultimately pointless regulations like medallion quotas never again see the light of day. Uber and Lyft prove that allowing companies to compete provides the best protection for consumers in the marketplace, and ensures we’re really getting the best bang for our buck.

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