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Regulation and Competition of Taxi Services

Throughout the world taxi market is generally considered a heavily regulated market. Such regulation refers primarily to establishing market entry restrictions, establishing taxi fares schemes, setting up minimal passenger safety and protection standards, as well as ensuring that certain universal service requirements are adhered by respective taxi operators. Market regulation is normally justified where externalities prevail that ultimately harm competition and go to the detriment of overall consumer wellbeing. Regulation of taxi markets resulted in creation of closed market structures which eventually led to establishment of monopoly or oligopoly of a limited number of taxi operators that enjoyed significant economic protection, normally denied to other entrepreneurs. The need for such severe restriction of competition generally invoked upon the necessity of establishing a valid consumer protection environment. The appearance of Uber demonstrated how a strong willed participant can stir the pot. Generally being denied market entry on such restrictive regulatory grounds, Uber’s struggle revived interest in the dormant taxi market and raised the unpleasant issue of whether such stringent regulation can still be justified. This paper will elaborate on the fundaments of regulatory intervention in a market, the current taxi market structure, the Uber business model and ultimately on the adequacy of grounds used to justify institution and enforcement of such regulatory measures in the taxi market.

regulation, competition law, relevant market, taxi services, substitutes, consumers’ benefit

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