5. Case 4. Ridesourcing services: regulatory challenges and regulatory approaches
To harness the potential of the ridesourcing model, governments should adopt a regulatory approach that does not unnecessarily inhibit the realisation of key benefits. An even-handed approach between incumbents and new entrants is needed, as is accommodating the ridesourcing model within regulatory frameworks and reviewing and reforming outdated taxi regulation that can undermine taxis’ ability to compete effectively. At the same time, new or enhanced regulation will be required to address consumer protection concerns, equity issues and negative externalities Such regulatory interventions should focus on clearly problems and rely on a good understanding of the nature of new services and the emerging market in which they operate.
General description of the technology
The ridesourcing model is based on the integration of the technologies of smart-phones, apps and GPS location into a convenient and efficient means of connecting drivers and riders and processing payments.
However, another key element of the model is use of privately owned vehicles (and their owners/drivers) on a part-time basis to provide taxi-like services. This innovation has yielded important efficiency gains, as it facilitates short-term supply responsiveness at low cost. That is, ridesourcing services can readily respond to the typically large hour-by-hour and day to day fluctuations in service demand, without maintaining large fleets of dedicated vehicles which suffer from low average utilisation rates, in contrast to the traditional taxi model.
By early 2019, less than a decade after the launch of the first ridesourcing service, the industry had estimated global revenues of $184 billion and almost one billion user.1
Overview of the main market players and the market structure
The provision of on-demand taxi-like services is subject to significant network effects, since expected waiting time is a key element of quality of service. Thus, companies must rapidly reach a critical scale in order to compete effectively. Individual ridesourcing markets have, from the early days of the model, also been dominated by a small number of players. Even in New York City, where ridesourcing had a market share of almost 70% in early 2019,2 only four companies met the definition of a “High Volume For-Hire Service” established as part of the implementation of the Driver Income Rule from December 2018.3 However, the dominant players differ widely between jurisdictions: While a few, such as Uber, have dominant positions in numerous countries, none is pre-eminent at a global level. For example, Uber exited the Chinese market after a period of strong competition with local company Didi Cuching. Thus, while individual markets typically have only a handful of players, comparison site Rideguru tracks 91 ridesourcing companies on its website.4
While individual jurisdictions have only small numbers of providers, competitive pressure is generally strong. This reflects several factors. One is the continuing, significant role of traditional taxi companies. Second, neither drivers nor consumers are constrained to use only one provider. Indeed, a 2018 study focusing on New York City indicated that many drivers typically work for two or more ridesourcing platforms, often simultaneously (Parrott and Reich, 2018[1]). Third, market strategies indicate a focus on gaining and retaining market share. Indeed, a key feature of the model has been a strong reliance on repeated injections of venture capital to enable companies to reach critical scale and obtain market share quickly. This business model has meant that all or most operators have recorded substantial operating losses consistently over several years. Finally, there has been increasing engagement in the market by well-established companies from other industries, including General Motors and Sony.5
Key opportunities and threats arising from the new technology
Opportunities
Efficiency benefits
As noted, ridesourcing evolved as a means of providing taxi-like services using part-time drivers and their existing private vehicles. As such, the model incorporates a high level of flexibility in supply. The use of existing private vehicles entails important economic efficiency benefits, given that it necessarily involves increasing the typically very low utilisation rate of private vehicles. The scope of these benefits is likely to be substantial, given the extent of hourly and daily variation in demand for taxi-like services. Another important source of economic efficiency benefits has arisen from political economy factors: in many markets, the entry strategies adopted by ridesourcing companies have effectively overturned the long-term regulatory restraints on supply maintained in many markets.
Service quality benefits
The ridesourcing model provides opportunities for improvement in several dimensions of service quality, compared with the highly regulated taxi industry model found in most OECD countries and beyond. First, in addition to offering economic efficiency benefits, the flexible supply response enabled by the part-time use of private vehicles also enables service quality improvements by better matching demand and supply during peak periods, thus reducing waiting time, a key dimension of service quality.
Second, the automated GPS based matching of riders and drivers which represents the core functionality of the ridesourcing apps also contributes to reduced waiting times by reducing both matching times and error rates. That said, this aspect of the technology is not exclusive to ridesourcing and has been increasingly adopted by the traditional taxi industry, where this is not prevented by regulatory restrictions.
Third, the fact that vehicles are generally privately owned by their drivers and used on a part-time basis tends to favour better average quality in at least two ways: average mileages are significantly lower than for traditional taxis, while private (or intrinsic) incentives for good maintenance performance are also greater.
Security benefits
Two elements of the ridesourcing model have clear benefits improving the security of drivers and passengers, compared with traditional taxi models. First, payment is exclusively processed through the app. This means that cash transactions do not occur in ridesourcing vehicles and removes monetary incentives for aggression against drivers. Second, bookings are exclusively undertaken via the app. This removes the anonymity which is a feature of the street hail and rank segments of the taxi market6 and creates clear disincentives to criminal behaviour for both riders and drivers. Other app features, such as driver and rider rating systems, real-time journey tracking and “panic buttons” reinforce this dynamic.
Threats
Externalities: congestion and pollution
Concerns regarding congestion and pollution in densely populated city centres have long been advanced as one justification for regulatory restrictions on taxi supply, albeit that little or no convincing empirical evidence of the actual or potential size of this issue has been adduced (ECMT, 2007[2]). As the ridesourcing industry has increasingly taken market share from the taxi industry, these arguments have begun to be advanced as reasons for seeking to limit the supply of ridesourcing vehicles. As noted above, the total market for taxi-like services has expanded substantially in jurisdictions that have facilitated the entry of ridesourcing, largely as a result of modal shift. The extent of the increase in total supply (i.e. taxis plus ridesourcing) a priori suggests a stronger basis for these concerns.
Some research does conclude that ridesourcing contributes materially to congestion in at least some urban contexts. However, considered as a whole the literature on this issue reaches divergent conclusions regarding the specifics of the modal shifts caused by the growth of ridesourcing and, consequently, the extent to which ridesourcing is likely to contribute to urban congestion and pollution. The picture is complicated by the fact that researchers have in many cases focused on indirect indicators, such as modal shift, rather than on measuring ridesourcing’s contribution to congestion directly.
Several researchers find strongly negative effects. For example, (Schaller Consulting, 2018[3]) finds that modal substitution toward ridesourcing has largely been at the expense of public and active transport modes, while significant numbers of new trips have also been generated. (Clewlow and Mishra, 2017[4]) report that 22% of ridesourcing users stated they would take fewer trips if ridesourcing options were unavailable. (Graehler, Mucci and Erhardt, 2019[5]) conclude that, for each year after the entry of ridesourcing, heavy rail ridership declines by 1.3% on average and bus ridership by 1.7%. This effect is considered by the authors to potentially be a major explanation of recent transit ridership declines in the United States. (Tirachini and Gomez-Lobo, 2019[6]) conclude, on the basis of a Monte-Carlo simulation, that total vehicle kilometres travelled will increase unless ridesourcing “substantially” increases vehicle occupancy levels. A recent study focusing on the United States, in turn, concludes, based on a set of fixed-effect panel models estimated using metropolitan statistical area level data, that the entrance of transportation network companies7 led to increased road congestion in terms of both intensity (by 0.9%) and duration (by 4.5%) (Diao, Kong and Zhao, 2021[7]).
Other authors have reached more equivocal conclusions. Some suggest ridesourcing may substitute for bus travel but complement urban rail. (Clewlow and Mishra, 2017[4]) find that ridesourcing has led to a 6% decline in bus ridership and a 3% decline in light rail use in the United States, but is associated with a 3% increase in commuter rail use and a 9% increase in walking. Overall, they conclude that ridesourcing is “likely” to lead to an increase in vehicle kilometres travelled. Babar and (Babar and Burtch, 2017[8]) find ridesourcing leads to reductions in urban bus use, but increases in both subway and commuter rail services. However, the size of these impacts is correlated with the quality of transit services, with higher quality transit being associated with lesser degrees of substitution and higher complementarity. (Rayle et al., 2016[9]) conclude that ridesourcing’s impact on vehicle kilometres travelled is unclear.
(Doppelt, 2018[10]) also conclude that Uber substitutes for bus travel but complements metros and subways, while highlighting the variable effect size across cities and modes. Possible reasons for the differences advanced include each mode’s service area network, passenger demographic, and trip purpose. While they find that Uber is a substitute for public transport in the aggregate, the authors conclude that, because the impacts vary widely at city level, a single approach to regulating ridesourcing is insufficient. Rather, policymakers must understand their specific local dynamics in order to address key regulatory issues.
A third cohort of researchers reaches more positive conclusions. (Conway, Salon and King, 2018[11]) find ridesourcing use is associated with greater use of both transit and active transport (i.e. walking, cycling, etc), plus reduced car ownership. They argue the question of whether ridesourcing complements or substitutes for transit has more than one dimension, as it can both “compete with transit for individual trips, while complementing transit as part of a low-car lifestyle” . That is, if the availability of ridesourcing leads individuals to reduce their car ownership they are likely to increase their use of both ridesourcing and transit. (Cramer and Krueger, 2016[12]) find that Uber is a complement for public transit, increasing ridership by 5% after two years on average, although the size of this effect varies widely between cities, being generally stronger in larger cities and for smaller transit agencies.
To the extent that ridesourcing complements urban rail, it will have positive congestion impacts which will at least partially offset likely negative effects due to induced trips and substitution away from non-motorised modes. The significant variation in effect sizes highlighted in some studies suggests this complementarity is likely to be concentrated in cities with higher quality transit networks. By implication, investment in improved transit networks will increase ridesourcing’s complementarity with transit.
Research on modal substitution provides an indirect indicator of the ridesourcing’s congestion impacts. A smaller body of research, little of which is published in peer-reviewed journals, measures congestion impacts directly (Tirachini and Gomez-Lobo, 2019[6]). The conclusions of these studies regarding the congestion impact of ride-hailing are also diverse.
In San Francisco, where ridesourcing originates, a report published by the regulatory authority finds that ridesourcing was responsible for 47% of the increase in congestion observed in the city between 2010 and 2016 and 25% of total 2016 congestion, despite accounting for only around 5% of vehicle kilometres travelled in 2016 (San Francisco County Transportation Authority, 2017[13]). This result reflects the concentration of ridesourcing journeys near urban centres and in peak periods, when congestion is greatest.
Conversely, the impact of ridesourcing on congestion seems to have been much more limited in some cities. In New York City, a report published by the Major’s office found that reductions in vehicle speeds were driven primarily by increased freight movement, construction activity and population growth, rather than the growth of ride-sourcing (City of New York, 2016[14]), although more recent data show that taxis and ridesourcing vehicles collectively account for almost 30% of traffic in the Manhattan core (New York (New York City Taxi and Limousine Commission, 2019[15]). (Nie, 2017[16]) found that in Shenzen, People’s Republic of China, travel speeds dropped by an average of only 5% following the entry of ridesourcing, concluding that “…ridesourcing worsens congestion for taxis in the city, but the impact was relatively mild”. (Lee et al., 2019[17])find that there is an overall complementary relationship between Uber and public transit, but that Uber has a limited impact on public transit use or traffic congestion in cities with high “urban centrality”.
An empirical analysis by (Li, Hong and Zhang, 2016[18])concludes that ridesourcing services significantly decrease traffic congestion in urban areas and that “on-demand ride sharing could actually be a part of a solution to urban congestion in major urban areas.” The authors provide various hypotheses as to the dynamics which could underlie the observed results, but do not directly test them.8
Reviewing this literature, (Conway, Salon and King, 2018[11]) conclude that the evidence on the impact of ridesourcing on congestion is inconsistent, with ridesourcing “…found to increase, decrease and have no effect on traffic congestion” by different researchers.
Working conditions
In common with other “sharing economy” innovations, concerns have frequently been raised regarding the working conditions of ridesourcing drivers. The industry is characterised as forming part of a “gig economy” which erodes employment rights and standards. The main mechanism through which this erosion takes place is the consistent treatment of sharing economy workers as independent contractors, rather than employees. In most jurisdictions, the effect of this classification is that minimum wage laws do not apply, while drivers do not benefit from other minimum conditions provided to employees.
Quantitative evidence on the incomes of ridesourcing drivers is limited, though some US data suggest below minimum wage outcomes. A recent report based on New York City data (Parrott and Reich, 2018[1]) reported average compensation net of expenses of USD 14.25 per hour, with 25% of drivers earning less than the 2019 minimum wage for New York City of USD 13.50 per hour.9 A broader US-based study (Mishel, 2018[19]) reported average compensation of USD 11.77 per hour, with a wage equivalent10 of only USD 9.21 per hour, which is below most State-established minimum wages, but above the Federal minimum wage.
Ridesourcing drivers have consistently been treated as independent contractors, while companies have strongly resisted attempts to challenge this classification through legal and other challenges.
The broader context, however, is one in which taxi drivers who do not own their own licence (medallion) or vehicle have typically also been treated as independent contractors, rather than employees, while concerns about low levels of remuneration, often said to be below minimum wage levels, have also been widespread. Thus, the emergence of ridesourcing has not significantly altered the position of workers in the sector, notwithstanding ongoing concerns regarding negative impacts of the gig economy in the broader economy.
Nonetheless, some legal challenges have been instituted under existing employment laws, with indications that changes in the legal status of drivers may occur in some countries. A December 2018 UK Court of Appeal decision declares ridesourcing drivers to be employees, rather than independent contractors, but is subject to appeal at the time of writing (Business and Human Rights Resource Centre, 2018[20]). In February 2021, the UK’s Supreme Court ruled that a group of drivers should be classified as workers entitled to more protections.11 The next month, Uber announced that it would reclassify more than 70 000 drivers in Britain as workers who will receive a minimum wage, vacation pay and access to a pension plan.12
An April 2018 California Supreme Court decision13 proposed a broadly applicable test for determining employee status which would apparently have the potential to see both taxi and ridesourcing drivers, as well as “contractors” in a wide variety of other industries, classified as employees. In October 2020, a California appeals court on Thursday unanimously ruled against ride-hailing companies Uber Technologies Inc and Lyft Inc, saying they must reclassify their drivers in the state as employees.14
Equity issues
Despite being provided by private operators, the taxi industry is often seen as forming part of the public transport system. The widespread regulatory requirement that taxis accept all customers is one expression of this concept. Another is that taxis have been regarded as an important transport option for people with limited mobility. Governments have adopted a range of positive and negative incentives to ensure adequate supplies of accessible taxis and sufficient levels of access by those with limited mobility. These include provision of licences for accessible taxis on preferential terms, requirements that a certain proportion of large taxi fleets be comprised of accessible vehicles and provision of user subsidies for people with limited mobility.
The ridesourcing sector has been widely criticised for failing to make its services accessible. While some ridesourcing providers notionally allow riders to request a wheelchair accessible vehicle, they have been widely criticised for poor service provision. A 2018 report found that, even in New York City, the availability of wheelchair accessible vehicles is inadequate, with a vehicle located by Uber in only 55% of cases and by Lyft in only 5% of cases (New York Lawyers For The Public Interest, 2018[21]). Reflecting this, recent US data show that the market share of ridesourcing among people with mobility problems is substantially smaller than it is for the general population: while people with disabilities use private hire vehicles (i.e. taxis plus ridesourcing) twice as frequently as the general population, ridesourcing accounts for a significantly smaller proportion of their total private hire vehicle trips than is the case in the general population: while ridesourcing accounted for 79% of all such trips taken in 2017, ridesourcing trips account for only 28% of trips by people with disabilities (Schaller Consulting, 2018[3]).
As the success of ridesourcing has undermined the business model of the taxi sector, there has been increasing concern regarding the need to maintain an adequate level of provision of accessible services. The context is one in which the taxi industry was itself been subject to much criticism of its performance in this regard, prior to the establishment of ridesourcing, and many governments were responding by adopting increasingly stringent requirements.
Another aspect of the equity issue relates to access for people without access to smartphones and smartcards. As the ridesourcing model has been designed to rely on these tools for booking and payment processing, access has been largely denied to people who do not own them. The potential exclusion of people without access to credit cards and smartphones could become a significant issue should the availability of traditional taxis become restricted, while the size of this issue may be greater in middle- and lower-income countries.
Main ways the innovation affects the society and economy
Service availability
Ridesourcing has captured substantial market share from taxis in most markets in which they have been able to operate relatively freely, albeit to widely differing degrees. However, as noted above, the growth of ridesourcing has also been a reflection of significant increases in the overall modal share of taxi-like services. These increases often represent the reversal of long-term declines in modal share that have been a corollary of strong supply restrictions being maintained for extended periods and the limited competitive pressures seen in tightly regulated markets subject to such quantitative restrictions.
For example, data for New York City as a whole show that total for-hire vehicle (FHV) trips per day increased by 73.4% in the three years to the end of 2017 (Schneider, 2019[22]). Other US data show that the modal share of FHVs doubled between 2009 and 2017 (Conway, Salon and King, 2018[11]).
This increase in modal share reflects strongly increasing consumer demand, due to enhanced service quality. Quality improvements are evident in lower waiting times, better perceived safety and higher vehicle and driver quality. The increased modal share also reflects the fact that ridesourcing services are often available at lower prices than traditional taxis, notwithstanding that their fares are usually unregulated, while taxi fares are regulated in most jurisdictions. It should be noted that protractedly lower ride prices could in many cases only be applied at the expense of relatively low take rates (the proportion of the fare that the ridesourcing company gets) financed through investment capital: according to a 2019 newspaper article, the 2010s were “the decade of the subsidised ride”.15 While this trend seems to have reversed to some extent, such practices may have allowed ridesourcing companies to benefit from an uneven playing field.
One aspect of the increased modal share of taxi-like services is the expansion in their availability, in both geographical socio-economic terms. The nature and extent of these changes necessarily varies across markets. However, the experience of New York City provides a clear example. Data for Manhattan show that, while the number of trips completed by ridesourcing vehicles increased more than tenfold, from around 600 000 to 8 million, in the four years to end-2017, the net increase in the number of trips completed by FHVs over the same period was less than 20% (The Economist, 2018[23]). Conversely, in the outer boroughs, the total number of pickups by taxis and ridesourcing vehicles increased by over 150% in less than four years, from a little over 3 million in 2014, prior to the entry of ridesourcing, to almost 8 million in early 2018. Around 90% of these pickups were performed by ridesourcing vehicles (Schneider, 2019[22]).
(Brown, 2018[24]) found that in Los Angeles, ridesourcing “extends reliable car access to travellers and neighbourhoods previously marginalised by the taxi industry”. Moreover, while audit data revealed high levels of racial discrimination in the provision of taxi services, ridesourcing data revealed almost no racial-ethnic difference in service quality. Consistent with this observation, the freeze on the issue of new ridesourcing licences adopted in New York City in 2018 was opposed by a number of human rights groups on the grounds that it would adversely affect non-white consumers who are often refused service by the taxi industry (The New York Times, 2018[25]).
Impact on taxi industry incumbents
Ridesourcing has been the most controversial app-based service innovation (or sharing economy market offer). It has been highly disruptive to incumbent service providers, substantially reducing market share, largely eliminating monopoly rents previously conferred by regulated supply restrictions and caused economic loss on a scale not seen in other markets in which new entrants have grown rapidly, such as the accommodation market (AirBnB etc). This substantial disruption largely explains the strong and sustained attempts made by some governments to prevent ridesourcing services from establishing themselves, or to constrain the way in which they operate through restrictive regulation.
The economic efficiency benefits identified above imply that a degree of disruption to incumbents was inevitable. However similar benefits can be seen in other, far less disrupted markets. The key distinguishing feature of the taxi market is the large and sustained level of regulatory failure evident in a wide range of jurisdictions nationally. Regulatory restrictions on supply were initially justified in terms of the need to limit negative externalities (e.g. congestion and pollution) and/or underpin driver incomes, but effective lobbying by licence owners typically saw increasing imbalances between supply and demand, giving rise to rapidly increasing licence values, poor-service standards and declining modal share, as consumers increasingly sought alternatives to a taxi industry that responded poorly to their demands. By the beginning of the current decade, taxi licence (or medallion) prices, which represent the capitalised value of the monopoly rents accruing to them, exceeded AUD 500 000 in Melbourne and Sydney, USD 1.3 million in New York City and several hundred thousand dollars in many other major cities.
The rapid growth in ridesourcing services quickly overturned the regulatory supply constraints, radically reducing monopoly rents and causing the value of taxi licences to fall precipitously. This caused major disruption, particularly where licence-owners were heavily leveraged, as was often the case. The swift reversal of fortune faced by taxi licence owners has led to strong lobbying for a restrictive regulatory response. The context was generally one in which ridesourcing companies had deliberately sought to exploit regulatory ambiguity or uncertainty by claiming that features of their new service model meant that traditional taxi regulation did not apply to them.
Many governments initially responded positively to this lobbying and sought to block the entry of app-based ridesourcing. However, this response was rapidly revealed as unsustainable in many markets. From a policy perspective, the substantial economic efficiency benefits implicit in the new model became increasingly apparent while, from a political perspective, the high level of customer demand for the new services often made continued attempts to banish it from the market untenable. These negative initial responses were therefore often succeeded by the adoption of broadly-accommodating regulation (International Transport Forum, 2019[26]). Where this has yet to occur the restrictive approaches adopted typically remain under challenge.
Structural consequences
From a competitive perspective, ridesourcing appears to have had limited impact on the structure of the market for taxi-like services. This is predominantly the result of the importance of network effects in the sector. That is, the need to have a substantial and widely-distributed network of vehicles in order to respond to “on demand” service requests means that most urban taxi markets are characterised by a small number of relatively large service providers. In markets in which ridesourcing has become established, it is also dominated by a small number of players.
Conversely, limitation of the size of the fleet has not yet become a common regulatory response to the public policy issues posed by ridesourcing. This, combined with the generally lighter handed regulatory treatment of ridesourcing means that entry barriers are relatively low and that incentives to compete and innovate remain strong, relative to the pre-disruption taxi sector. This position may, however, not prove durable, as there are early signs of moves to both enact quantitative restrictions and adopt more intrusive regulation of various quality dimensions.
An example of the former is the August 2018 move by the NYC government to both enact a one-year freeze on the issue of ridesourcing driver permits and empower the regulator to regulate the number of licences on issue on a permanent basis. While the regulator has yet to exercise the latter power, the initial 12 month freeze was extended for a further year prior to its August 2019 expiry (City of New York, 2019[27]).
Some have argued that the sustained loss-making seen in the ridesourcing sector and consequent strong reliance on successive venture capital injections to underpin operations are inherently anticompetitive in nature, constituting unfair competition with the taxi industry, in particular. This concern has also been raised in other areas of the digital economy, such as in relation to Amazon’s long-term loss-making business model.16
However, other factors suggest that the risks of market dominance are limited. The OECD has argued (OECD, 2018[28]) that “pricing below cost” tests are not fit-for-purpose as a tool for identifying predatory pricing in platform markets. Instead, the relevant question is whether below-cost pricing is profitable for the platform, either because it makes the platform a stronger competitor by expanding its user base or by preventing rivals from building their own user bases. In the ridesourcing context, a predatory pricing strategy is unlikely to be feasible, as attempts to raise prices after the initial period of building market dominance - a necessary part of an exclusionary predatory strategy – are likely to flounder due to the ability of riders and drivers to migrate to a new rival platform. The ability of both drivers and consumers to “multi-home” – i.e. to use the services of multiple platforms simultaneously – underlines this risk. While there have been instances in which taxi firms have taken legal action against Uber for predatory pricing, some ongoing, none have been successful to date.
In sum, the low level of entry barriers in the industry suggests there is little practical likelihood of predatory strategies being successfully pursued, even by competitors with access to abundant capital.
Political economy
Ridesourcing poses acute regulatory challenges wherever the taxi industry has been subject to restrictive regulation. As noted above, the disruptive potential of ridesourcing is substantial where restrictive taxi regulation has yielded large monopoly rents for taxi industry incumbents and low levels of consumer satisfaction. Conversely, it is in these contexts that the potential benefits are greatest, in terms of economic efficiency gains and service improvement. Where ridesourcing platforms have exploited regulatory ambiguity to undertake rapid entry, strong consumer pressure to accommodate the new service model has often been generated. The first regulatory challenge is that of how to manage the transition from a largely static, heavily regulated industry to a market-driven one.
In markets in which taxi licences (medallions) have acquired large scarcity values, incumbents necessarily face large losses after the entry of ridesourcing. This has often yielded calls for government to compensate incumbents, for example through licence “buy-backs”. The body of case law to date, while limited, does not appear to have ever placed a legal obligation on governments to compensate licence-holders – in the taxi industry or elsewhere – for losses of licence value following regulatory changes.17 However, some governments have made some funding available to former incumbents.
Equal treatment of incumbents and entrants
The principle of equal treatment of incumbents and entrants derives directly from the principle of non-discrimination in law-making. It does not imply that all market segments must be subject to identical regulation, as different business models may require different regulatory arrangements. However, it does imply that regulation should not have the purpose of favouring incumbents over new entrants, or vice-versa.
The practical application of this principle in response to ridesourcing has posed a significant regulatory challenge. The changes to the market for taxi-like services that have followed the entry of ridesourcing have called into question the continued fitness for purpose of much of the regulatory structure applied to the sector, yet reform efforts have often been piecemeal and inadequate. Common elements of taxi regulation which impede the sector’s ability to compete with ridesourcing are:
Supply restrictions: Where ridesourcing has been accommodated in regulation, it has generally been as “For hire vehicles” (FHVs), which have not typically been subject to supply restrictions. In this context, the maintenance of limits on taxi licence numbers effectively places significant limits on the taxi sector’s ability to defend its market share against ridesourcing. Some jurisdictions (notably a number of Australian states) have addressed this issue through a combination of taxi licence buybacks, typically at a discount to the already diminished market value of the licences, combined with the subsequent removal of restrictions on taxi licence numbers.
Price regulation: Price regulation is in large part a necessary corollary of restrictions on taxi supply, as it serves to limit taxis’ ability to reap monopoly rents from consumers. It also responds to the information asymmetry problem in the street hail market. The major increase in supply caused by ridesourcing, together with the advent of “e-hailing”, renders price regulation largely redundant. Regulating taxi prices but not ridesourcing prices limits the former’s ability to compete. Conversely, while the “dynamic pricing” model used by ridesourcing services can readily be defended as being economically efficient, it has been criticised on equity grounds, giving rise to pressure for some form of price regulation in this sector.
Vehicle standards: The continuation of other, restrictive regulatory requirements – for example in relation to vehicles and modes of operation - is also increasingly costly in an environment in which ridesourcing is typically not subject to the same constraints (Deighton-Smith, 2018[29]). Conversely, while a number of features of the ridesourcing model imply that the case for safety-based interventions is weaker than in the traditional taxi market (as discussed above), regulators have had to address the question of whether the incentives created are sufficiently strong and reliable as to obviate entirely the need to apply particular types of safety based regulation to the sector. Decision-making is typically complicated by the lack of data on key dimensions of safety. However, as ridesourcing has continued to expand, there are signs of regulatory attitudes coming full-circle – from initial attempts at prohibition, to accommodation via very light-handed regulation, to increasing calls for more detailed regulatory interventions, often in response to widely-publicised but apparently rare incidences of consumer or driver harms.
Regulatory enforcement
Market entry by ridesourcing companies has posed a range of enforcement challenges for regulators. A fundamental issue is that early evidence of significant consumer benefits from, and support for, the disruptive entrant raise questions regarding the appropriateness of the existing regulatory structure and, by implication, the issue of the most appropriate enforcement responses. This factor has led some regulators to make rapid changes in approach. For example, (Flores and Rayle, 2017[30]) highlight the fact that San Francisco’s taxi regulators initially issued cease and desist orders to Uber in 2012, but chose not to enforce these after the company failed to comply with them. However, unwillingness to enforce existing regulation necessarily creates pressure to implement regulatory change.
At a practical level, attempts to enforce existing taxi laws have often met with very limited success. This seems to have been particularly the case where action has been taken against individual drivers. Support from ridesourcing platform operators has often meant enforcement actions have been challenged in courts, with the ambiguous status of ridesourcing in relation to pre-existing taxi and for hire vehicle regulation often meaning actions have been unsuccessful. Even where penalties have been applied, the willingness of platform operators to indemnify drivers has meant that enforcement has had limited effect.
The ambiguous regulatory status of ridesourcing has also been highlighted via higher-level enforcement actions; for example, litigation in the European Court of Justice focused on the question of whether Uber provides a transport service or a technology service for the purposes of European law. Enforcement actions have targeted platform providers and directors in some jurisdictions and have arguably had greater effect. For example, Uber ceased operation of its UberPop service following the imposition of significant fines for the provision of an illegal transport service on both the company and two of its directors by a French court.18 However, despite this limitation on its service offering, France remained one of the company’s largest European markets.
The regulatory enforcement problems encountered by governments in respect of ridesourcing highlight the need to review and revise existing regulatory structures in a timely manner in response to disruptive innovation. This is needed both to ensure that the regulatory regime enables the benefits of these innovations to be maximised and costs minimised and to ensure that any enforcement activity is well-directed, toward addressing real harms, as well as being proportionate and appropriately targeted. That said, the rapid changes in approach to ridesourcing seen in some jurisdictions highlight the risks of undertaking regulatory actions before the market dynamics of disruptive entry are reasonably well-understood and the implications for the economy and society can be assessed.
Regulatory approaches being used or contemplated
Regulatory responses to ridesourcing have varied extremely widely, both within and between countries. Governments have differed on the fundamental question of whether to facilitate this innovation or seek to prevent it becoming established. In many cases, initially prohibitive approaches have quickly been reversed, typically in response to strong consumer pressure for it to be accommodated by the regulatory system. This includes Finland, where Uber was ruled illegal by the Court of Appeal in 2016, but where new legislation subsequently authorised its operation in 2018, and Victoria, Australia, where initial prosecutions of Uber drivers by the Taxi Services Commission gave way to new legislation explicitly recognising ridesourcing and providing for an integrated regulatory structure to govern all types of passenger vehicle services. However, ridesourcing continues to be prohibited or subject to onerous restrictions in many countries.
Moreover, the initially light-handed approaches to the regulation of ridesourcing taken in many jurisdictions appear to be giving way to more interventionist models, as the sector grows and evolves and additional policy issues associated with its operation become more apparent. The following highlights a range of regulatory responses that have been adopted in one or more jurisdictions to address these issues and discusses the potential performance of these approaches. Many of these interventions come from parts of the United States (New York City Area in particular) where the ridesourcing industry benefits from a relatively long history, a broadly permissive regulatory environment and, consequently, a high level of market penetration.
Congestion charges
Fleet-wide congestion charges are in place in only a few cities globally (notably London, Manchester, Milan, Singapore and Stockholm). However, several cities have applied congestion charges specifically to the ridesourcing sector, while some have also applied these charges to the taxi sector. While there is strong support among economists for general congestion charges, it does not follow that sector-specific congestion charges necessarily constitute an effective and equitable intervention. Proponents of such policies argue that:
Unlike private cars, ridesourcing vehicles do not pay parking fees when operating in congested central city areas. As parking fees are increasingly being used to encourage modal shift – i.e. functioning as a de facto congestion charge – a ridesourcing specific congestion charge can be seen as an alternative means of achieving the same policy objective.
Ridesourcing vehicles’ near constant movement (both while carrying paying passengers and, typically, cruising between jobs) and their tendency to block traffic during pick-up and set-down activity mean that, per vehicle, they make a larger contribution to congestion than private cars.
Ridesourcing vehicles and taxis can collectively constitute a very large proportion of the vehicle fleet in some dense inner-urban environments, where congestion and pollution concerns are greatest.
The design of sector-specific congestion charges adopted to date varies substantially. On one hand, New York City has adopted a flat-rate charge of USD 2.75 in respect of any taxi or ridesourcing trip entering the Manhattan core, as one of a suite of tools intended to address congestion and pollution concerns, including limits on licence issue and fleet numbers. On the other, Sao Paolo’s ridesourcing-specific congestion charge19 is much more complex. While based on a per mile charge, a system of “discounts” means the amount paid varies according to a range of parameters. While some are congestion-related (i.e. off-peak and weekend discounts), other relate to different policy objectives. These include whether the vehicle is accessible, is electric or hybrid powered, or is driven by a woman.
The principle of equal treatment of entrants and incumbents would suggest that such charges should be applied consistently to both the taxi and ridesourcing sectors. However, this approach is not always adopted. For example, while the NYC charge applies to both sectors, London recently ended ridesourcing’s exemption from its fleet-wide congestion charge, while retaining the exemption for (black) taxis.
Other sector-specific charges
While relatively few cities adopted explicitly congestion-related, ridesourcing-specific charges to date, ridesourcing-specific charges based on other policy rationales are widely adopted. The two most common reasons advanced to justify such charges are:
to address the negative social and economic impacts of the disruption of the taxi industry caused by ridesourcing
to address strains on the viability of transit systems, which are in some cases said to be exacerbated by ridesourcing’s impact in reducing ridership.
Revenues raised by these charges sometimes flow to general government revenue, but are more commonly hypothecated, typically to more than one purpose. For example, in Washington DC and Chicago, revenues are largely directed to funding the transit system. In Mexico City and Massachusetts, proceeds flow to city or State transport funds, with a proportion being directed to support the taxi industry. In Calgary, revenues support the improvement of an accessible taxi programme, while in Philadelphia funds are split between the school system and the parking authority (International Transport Forum, 2019[26]).
Several Australian State governments (e.g. Victoria, New South Wales, Western Australia) have imposed flat per-ride surcharges on the taxis and ridesourcing sectors, with the revenue being entirely hypothecated to funding schemes established to compensate taxi licence-owners for losses in licence values following the entry of ridesourcing. These schemes are notable in two respects. First, the per-ride surcharges adopted are intended to be time-limited, rather than permanent – albeit that their expected duration is several years. Second, the assistance provided to taxi licence-owners has been structured as part of a move to an open-entry taxi system, enabling the sector to compete for market share on a level playing field with ridesourcing20 (International Transport Forum, 2019[26]). This latter initiative stands in contrast to the more common situation in which, despite the former value of taxi licences having been substantially eroded by competition from ridesourcing, governments have retained entry restrictions, thus supporting these residual values, which appear to reflect the value of taxis’ continued monopolies on the street hail and rank markets.
Fleet size limits/freezes on licence issue
As noted above, the New York City government imposed a 12 month moratorium on the issue of ridesourcing driver licences in August 2018 and has subsequently extended the freeze for a further year. This is one of a suite of regulatory responses to the rapid expansion of ridesourcing that appear to be untried in other markets. It also empowered the regulator (the Taxi and Limousine Commission – TLC) to regulate the size of the ridesourcing fleet on a permanent basis in August 2018, while a June 2019 TLC report has proposed “tighter regulation of the number of licensed FHVs moving forward” (New York City Taxi and Limousine Commission and Department of Transportation, 2019[31]), modelling the impacts of this recommendation on the basis of an 8% reduction in current active FHV numbers.
These initiatives respond to concern that the very rapid growth of the ridesourcing sector was contributing significantly to worsening congestion. The TLC stated in 2018 that these measures were adopted as “second best” policies, after the failure of a proposal for the State government to adopt congestion charging in Manhattan for all private vehicles.
Fleet size limits constitute an indirect and inefficient response to congestion concerns, for several reasons. First, they target only a small part of the fleet – albeit one that has a high level of activity in the most congested areas – so necessarily have limited effectiveness. Second, they limit the ability of ridesourcing companies to operate throughout the licensed area, rather than specifically addressing areas of major congestion concern. A likely consequence of this is that any shortage of services will be felt in less well-served outer areas, rather than via a reduction in activity in the urban core. Uber reported in July 2019 that its analysis of trip data shows that poorer areas of the city have become relatively less well-served since the cap and other measures have come into effect.21 Modelling of the TLC’s proposal for tighter regulation of FHV numbers also shows that the negative impacts on service would be concentrated in the outer boroughs, rather than the city centre (New York City Taxi and Limousine Commission and Department of Transportation, 2019[31]).
Data show that the number of trips per day undertaken by ridesourcing vehicles continued to rise for seven months after the freeze was adopted and that, while it fell over the five subsequent months, the fall was significantly smaller in percentage terms than the number of trips undertaken by taxis over the same period.22 A second proposal to adopt a congestion charge on all private vehicles was adopted by the NY State government in March 2019, however, no change to the fleet size restriction policies has been announced to date.
The adoption of fleet size limits appears not to have become a widespread regulatory response since the mid-2018 announcement of the New York City policy, however. In fact, a number of governments have explicitly rejected proposals along these lines. For example, a recent decision by Vancouver’s Passenger Transportation Board explicitly rejected proposed limits on fleet size, as well as surge pricing, having concluded that these are “…key to the models of ridehailing companies”.23 Similarly, in 2019, the United Kingdom government rejected the recommendation of an independent review that local authorities be empowered to set limits on the size of ridesourcing fleets.24
Minimum utilisation rates
The New York TLC was empowered in 2018 to set minimum utilisation rates (otherwise referred to as “cruising limits”, as they effectively limit the proportion of the time ridesourcing vehicles are allowed to be unoccupied, or cruising for work. In its June 2019 report (New York City Taxi and Limousine Commission and Department of Transportation, 2019[31]), it recommended that the city government adopt a cruising limit of 31% in the Manhattan core. This would represent an 8.2% reduction from the then current average of 39.2%, although the report noted that one ridesourcing company already meets this standard and that cruising levels are lower in some outer boroughs than in Manhattan. It is proposed that companies would be given one year to reach compliance, after which they would be faced with escalating fines and licensing sanctions. Compliance would presumably require ridesourcing companies to refuse some drivers access to the App within the relevant geographical area, though the mechanics of this are not explained in the report. The report models the outcome of applying this policy in conjunction with its proposed tightening of restrictions on FHV numbers (see above) and concluded that a 24% reduction in FHV hours travelled within the Manhattan core would initially result, with a 13% increase in waiting times.
The proposed minimum utilisation rates would not apply to taxis. The TLC report does not explain the rationale for this differentiation between the two sectors. It is particularly notable given that current utilisation rates are significantly lower for yellow taxis than ridesourcing vehicles,25 while yellow taxis are more strongly concentrated in the Manhattan core than are ridesourcing vehicles.
Return to base requirements
Some jurisdictions (e.g. Germany26) have regulated to require ridesourcing vehicles to return to their depots after each ride is completed. These rules have in some cases been justified as means of minimising congestion and pollution issues by reducing the time ridesourcing vehicles spend cruising the streets while waiting for their next engagement. Alternatively, they are seen as attempts to enforce in practice the requirement that for hire vehicles are restricted to serving the pre-booked market, with taxis retaining the monopoly of the street hail and rank markets. However, there are clear efficiency costs associated with such requirements, while they can also be seen as contrary to the principle of equal treatment of incumbents and entrants.
Driver income initiatives
New York City has also responded to concerns about driver incomes and working conditions by moving to regulate ridesourcing driver incomes. The “Driver Income Rule”, adopted after an independent review (Parrott and Reich, 2018[1]), is intended to guarantee a minimum, post-expenses hourly income for drivers, at a level equivalent to the NYC minimum wage. It is also intended to provide a financial incentive for ridesourcing companies to increase their fleets’ utilisation rates, thus reducing ridesourcing’s contribution to congestion. To achieve these two goals, the rule specifies minimum per-trip payment requirements via a formula which includes time and distance elements, modified by an utilisation rate. In practice, the minima payable per mile and per minute are higher where a ridesourcing company has a lower utilisation rate, and vice versa. The intended outcome is that the minimum hourly driver income will not change with the company’s utilisation rate. Its designers estimated that the rule would increase the average net incomes of drivers previously receiving less than the minimum wage by 22%.
Limited data on the impact of the rule are available, as it took effect only in February 2019. However, reports from June 2019, based on data compiled by the regulator, found that post-expense driver incomes hat increased from $ 14.22/hr to $ 16.63/hr, though short of the target of $ 17.22/hr. Conversely, while the income formula’s designers predicted price increases of less than 5% and increases in waiting times of 12 – 15 seconds due to moves to raise utilisation rates, early reports suggest that price increases have been of the order of 10 – 20%, while ridesourcing trip numbers fell by almost 16% between March and August 2019. Notably, while Lyft challenged the rule on the basis that the utilisation rate element unfairly disadvantaged smaller competitors who were less able to keep utilisation high, the reduction in trip numbers appears to have been predominantly felt by Uber, which saw an 18.7% reduction in trip numbers from March to July 2019.27
The rule applies only to ridesourcing drivers, despite concerns regarding taxi driver income levels being at least as acute. The regulator notes that the formula-based approach is not applicable to the taxi business model, while other efforts (notably capping licence lease fees) have previously been implemented in attempts (albeit unsuccessful) to support taxi driver incomes. However, the differential approach to the strongly competing taxi and ridesourcing sectors necessarily raises concerns regarding the principle of equal treatment of incumbents and entrants.
Accessibility requirements
Another, apparently unique NYC regulatory initiative is the adoption, in late, 2017 by a rule requiring that 5% of FHV dispatches (including ridesourcing) be of accessible vehicles as from January 2019, rising progressively to 25% by 2024 (New York City Taxi and Limousine Commission and Department of Transportation, 2019[31]). The Rule sets the target in terms of the number of dispatches, which provides FHV dispatchers with flexibility to determine how many accessible vehicles they need in order to meet the 5% requirement. The NYC Rule appears to be the first to regulate the provision of accessible services by ridesourcing companies.
Notwithstanding long-standing government policies supporting the expansion of the number of accessible vehicles in the taxi fleet, activists brought and settled a discrimination suit against the city government in 2013. The terms of the settlement led to the adoption of a Rule requiring that 50% of the taxi fleet be wheelchair accessible by 2020.
Overview
Ridesourcing brings important economic efficiency benefits and has been embraced enthusiastically by consumers where it has been able to operate relatively freely. This necessarily implies that attempts to prohibit its operation or regulate it in unduly restrictive ways will have real welfare costs. This suggests that they are unlikely to succeed in the long term. Nonetheless, ridesourcing remains either prohibited or heavily restricted in its operations in many jurisdictions. In other jurisdictions in which ridesourcing has been accommodated by the regulatory system and the sector has grown to maturity, there are increasing signs of more interventionist regulatory approaches developing.
A key issue is that ridesourcing-specific regulations seek to deal with externality issues that are of more widespread concern. For example, while ridesourcing may have had significant effects on congestion in some cities, policies such as limits on the fleet size or utilisation rate of the ridesourcing sector are clearly second-best when considered in the absence of a congestion charge that addresses the contribution of the whole vehicle fleet to this issue. Similarly, where there are concerns regarding the impact of the “gig economy”’ on employment terms and conditions, attempts to set minimum income rules for this sector constitute an inadequate substitute for policies that address broader deficiencies in employment laws. The long-term influence of the taxi sector on the political process suggests that pressures to adopt such sector-specific rules may be motivated, at least in part, by desire to influence the competitive position of ridesourcing vis-à-vis the traditional taxi sector.
The 2012 Recommendation of the OECD Council on Regulatory Policy and Governance (OECD, 2012[32]) highlights the importance of the tools of regulatory policy as promoting evidence-based policy making and thereby ensuring that regulations are of high quality, in the sense that they confer benefits on the society that are larger than the costs they impose and thus contribute to social well-being. Ensuring that the key regulatory policy tools are applied in a timely and systematic way can contribute substantially to ensuring that governments develop optimal regulatory responses to the opportunities and challenges posed by the development of the ridesourcing market. In particular:
Conduct reviews of significant regulation against clearly defined policy goals
The above discussion highlights the need to review and revise the body of taxi regulation in response to the innovations and challenges brought by ridesourcing. Widespread and long-running dissatisfaction with the body of taxi regulation in many jurisdictions, with common charges of “regulatory capture” underlines the need for coherent and systematic approaches to the review task. As the Recommendation notes, reviews should be conducted having regard to clearly identified and defined policy goals. Such approaches are particularly important in the context of taxi regulation, which has developed in incremental and ad hoc ways in most countries and has rarely been subject to first principles reviews.
The need for ex post review also extends to regulation adopted in response to the development of ridesourcing. Indeed, the risk of regulatory failure is relatively higher in contexts in which existing markets are disrupted by new business models and policy makers are poorly placed to predict or understand their likely impacts on markets and the broader economy.
Integrate regulatory impact assessment (RIA) into the early stages of the regulatory process
RIA is a fundamental tool of evidence-based policy making. It is based on the key principles of clearly specified policy goals, systematic identification of all options capable of achieving the goals, careful analysis of the benefits and costs of each option, with definition of an appropriate baseline scenario (which in rapidly transforming contexts will typically require a dynamic perspective), quantification of impacts wherever feasible, and a rigorous comparison of the impacts of the options against explicit criteria.
The RIA discipline thus increases transparency as to the implications of different regulatory choices and highlights the broader social costs of regulation that favours sectional interests. These characteristics are particularly important given the history of taxi regulation and can highlight areas in which proposals to regulate ridesourcing are driven primarily by (or would have the effect of) defending the impacts of incumbents, at significant cost to consumers. This is likely to be particularly important in relation to externality issues such as congestion and pollution, where a clear focus on the relative performance of different policy tools is needed to ensure sound policy choices.
Adopt principles of open government, including transparency and participation in the regulatory process
Citizens are increasingly asking to be involved throughout the policy cycle to ensure that policies address their needs and demands and that their opinions and concerns are heard. This new culture of governance, which places citizens and other stakeholders at the centre of public policies and service delivery, is known as open government. It is defined by the OECD as “a culture of governance that promotes the principles of transparency, integrity, accountability and stakeholder participation in support of democracy and inclusive growth” (OECD, 2017[33]). The Recommendation of the Council on Open Government recognise that many intermediary forms of participation exist, and maps the different existing relationships between citizens and governments, ranging from weaker to stronger forms of participation: information, consultation and engagement (OECD, 2017[33]).
Enabling effective participation in the regulatory process is also a means of preventing the outcome being captured by well-organised special interests, develop tailored and more responsive regulatory proposals as stakeholders provide their expertise and perspective on areas in which governments have less knowledge and understanding, making them more likely to achieve their objectives. It exposes claims to scrutiny and brings forward different perspectives.
Recognise their shortcomings and potential areas for improvement
More importantly, if government policy making is transparent, accountable and participatory, there will be more stakeholder buy-in with the proposals and ultimately more trust and compliance with the regulatory proposal. Wide and inclusive participation in regulation-making can also help to identify unanticipated impacts of regulatory proposals, as well as providing information the acceptability or perceived legitimacy of proposals. Involving a greater range of voices, particularly marginalised demographics, will give governments greater insight into service gaps and necessary reforms. However, participation opportunities must be well-designed, to ensure that all relevant interests are able to engage effectively. Failure to do so can lead to unbalanced outcomes and enable organised interests to prevail and lose confidence n the regulatory process
The strongly differing perspectives on key issues in the taxi and ridesourcing sector, including the implications of ridesourcing for service availability, accessibility and equity, congestion and pollution, and employment conditions make it particularly important that policy making incorporate open government principles. This helps ensure both that all perspectives are brought forward and that they are subject to sustained, critical scrutiny.
The ridesourcing model has the potential to deliver significant economic efficiency benefits, while also being among the most disruptive market innovations of recent years. The size of the available welfare benefits means that governments should adopt a generally permissive regulatory approach which does not unnecessarily inhibit the realisation of these gains (International Transport Forum, 2019[26]). This implies adopting an even-handed approach as between incumbents and new entrants, rather than seeking to manage or minimise disruption via interventions that would limit the ability of ridesourcing to compete and reduce the available welfare benefits. Such an approach should include both accommodating the ridesourcing model within regulatory frameworks and reviewing and reforming outdated taxi regulation that can undermine taxis’ ability to compete effectively.
At the same time, the existence of legitimate consumer protection concerns, equity issues and externality impacts implies that new or enhanced regulation is likely to be required. Such regulatory interventions should be based on addressing clearly identified market failures and equity issues and a sufficiently clear understanding of the nature of new services and the emerging market in which they operate are sufficiently well-understood, to avoid imposing ineffective regulation with unanticipated costs.
References
[8] Babar, Y. and G. Burtch (2017), “Examining the Impact of Ridehailing Services on Public Transit Use”.
[34] Biderman, C. (2018), “Mitigating Congestion and Environmental Impacts from Ride-Sharing Services: The Case of TNC Regulation in São Paulo, Brazil”, Presentation at the ITF Roundtable on Regulating App-Based Mobility Services, Beijing, 1-2 November 2018..
[24] Brown, A. (2018), “Ridehail Revolution: Ridehail Travel and Equity in Los Angeles”, PhD Thesis, UCLA.
[20] Business and Human Rights Resource Centre (2018), “UK: Court of Appeal upholds ruling over Uber driver rights; Uber says it will appeal to Supreme Court”, https://www.business-humanrights.org/en/latest-news/uk-court-of-appeal-upholds-ruling-over-uber-driver-rights-uber-says-it-will-appeal-to-supreme-court/.
[27] City of New York (2019), “Mayor de Blasio Announces Extending FHV Caps to Protect Hardworking Drivers, Increase Their Pay & Reduce Cruising by Empty Cars in Manhattan”.
[14] City of New York (2016), “For hire vehicle transportation study, Office of the Mayor,”, http://www1.nyc.gov/assets/operations/downloads/pdf/For-Hire-Vehicle-Transportation-Study.pdf.
[4] Clewlow, R. and G. Mishra (2017), “Disruptive Transportation: The Adoption, Utilization, and Impacts of Ride-Hailing in the United States”, UC Davis Institute for Transportation Studies Research Report UCD-ITS-RR-17-07.
[11] Conway, M., D. Salon and D. King (2018), “Trends in Taxi Use and the Advent of Ridehailing, 1995–2017: Evidence from the US National Household Travel Survey”, Urban Science, Vol. 2/3, p. 79, https://doi.org/10.3390/urbansci2030079.
[12] Cramer, J. and A. Krueger (2016), “Disruptive Change in the Taxi Business: The Case of Uber”, American Economic Review, Vol. 106/5, pp. 177-82.
[29] Deighton-Smith, R. (2018), “The Economics of Regulating Ride-Hailing and Dockless Bike Share”, International Transport Forum Discussion Papers, No. 2018/24, OECD Publishing, Paris, https://dx.doi.org/10.1787/2baf35bd-en.
[7] Diao, M., H. Kong and J. Zhao (2021), “Impacts of transportation network companies on urban mobility”, Nature Sustainability, Vol. 4/6, pp. 494-500, https://doi.org/10.1038/s41893-020-00678-z.
[10] Doppelt, L. (2018), “Need a Ride? Uber Can Take You (Away From Public Transportation)”.
[2] ECMT (2007), (De)Regulation of the Taxi Industry, ECMT Round Tables, No. 133, OECD Publishing, Paris, https://dx.doi.org/10.1787/9789282101155-en.
[30] Flores, O. and L. Rayle (2017), “How cities use regulation for innovation: the case of Uber, Lyft and Sidecar in San Francisco”, Transportation Research Procedia, Vol. 25, pp. 3756-3768, https://doi.org/10.1016/j.trpro.2017.05.232.
[5] Graehler, M., A. Mucci and G. Erhardt (2019), “Understanding the Recent Transit Ridership Decline in Major US Cities: Service Cuts or Emerging Modes?”.
[26] International Transport Forum (2019), “Regulating app-based mobility services”, ITF Roundtable No. 175 (Beijing, 1 – 2 November 2018).
[17] Lee, K. et al. (2019), “Ride-Hailing Services and Sustainability: The Impact of Uber on the Transportation Mode Choices of Drivers, Riders, and Walkers”, SSRN, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3244207.
[18] Li, Z., Y. Hong and Z. Zhang (2016), “Do Ride-Sharing Services A ffect Traffi c Congestion? An Empirical Study of Uber Entry”, SSRN Electronic Journal, https://doi.org/10.2139/ssrn.2838043.
[19] Mishel, L. (2018), “Uber and the Labor Market: Uber Drivers’ Compensation, Wages, and the Scale of Uber and the Gig Economy”, Washington, D.C.: Economic Policy Institute.
[15] New York City Taxi and Limousine Commission (2019), “2019 Annual Report”.
[31] New York City Taxi and Limousine Commission and Department of Transportation (2019), “Improving Efficiency and Managing Growth in New York’s For-Hire Vehicle Sector”.
[21] New York Lawyers For The Public Interest (2018), “Left.Behind: New York’s For-Hire Vehicle Industry Continues to Exclude People With Disabilities”.
[16] Nie, Y. (2017), “How can the taxi industry survive the tide of ridesourcing? Evidence from Shenzhen, China”, Transportation Research Part C: Emerging Technologies, Vol. 79, pp. 242-256.
[28] OECD (2018), “Rethinking anti-trust tools for multi-sided platforms”.
[33] OECD (2017), “Recommendation of the Council on Open Government”, OECD/LEGAL/0438.
[32] OECD (2012), “Recommendation of the Council on Regulatory Policy and Governance”, OECD/LEGAL/0390.
[1] Parrott, J. and M. Reich (2018), “An Earnings Standard for New York City’s App-based Drivers: Economic Analysis and Policy Assessment”, Center for New York City Affairs.
[35] Parrott, J. and M. Reich (2018), “An Earnings Standard for New York City’s App-based Drivers: Economic Analysis and Policy Assessment”, The New School, Center for New York City Affairs, Report prepared for the New York City Taxi and Limousine Commission.
[9] Rayle, L. et al. (2016), “Just a better taxi? A survey-based comparison of taxis, transit, and ridesourcing services in San Francisco”, Transport Policy, Vol. 45, pp. 168-178, https://doi.org/10.1016/j.tranpol.2015.10.004.
[13] San Francisco County Transportation Authority (2017), “TNCs today: Final Report”, https://www.sfcta.org/sites/default/files/2019-02/TNCs_Today_112917_0.pdf.
[3] Schaller Consulting (2018), “The new Automobility: Lyft, Uber and the Future of American Cities”.
[22] Schneider (2019), “Taxi and ridehailing usage in New York City”.
[23] The Economist (2018), “The social costs of ride-hailing may be larger than previously thought”.
[25] The New York Times (2018), “What’s the Right Number of Taxis (or Uber or Lyft Cars) in a City?”.
[6] Tirachini, A. and A. Gomez-Lobo (2019), “Does ride-hailing increase or decrease vehicle kilometers traveled (VKT)? A simulation approach for Santiago de Chile”, International Journal of Sustainable Transportation, Vol. 14/3, pp. 187-204, https://doi.org/10.1080/15568318.2018.1539146.
Notes
← 1. https://www.statista.com/outlook/368/100/ride-hailing/worldwide.
← 3. These were Juno, Lyft, Uber and Via. Driver Income Rule: https://www1.nyc.gov/assets/tlc/downloads/pdf/driver_income_rules_12_04_2018.pdf.
← 4. https://ride.guru/content/resources/rideshares-worldwide.
← 5. The former has a significant stake in Lyft, while the latter is offering a taxi-hailing service in Tokyo.
← 6. And, to a lesser extent, the phone booking market.
← 7. Transportation network companies “use online platforms to provide rides on demand by connecting passengers with drivers using their private vehicles based on real-time information” (Diao, Kong and Zhao, 2021[7]).
← 8. This include the higher average occupancy of ridesourcing vis-à-vis taxis (Rayle et al., 2016[9]), research indicating that the availability of car sharing options reduced car ownership, wider modal-shift impacts of using ridesourcing, the impact of surge pricing in moving trips to less congested times and higher capacity utilisation in ridesourcing than taxis (citing Cramer and Kruger 2016
(Cramer and Krueger, 2016[12]), who find that “the efficiency of Uber is much higher than traditional taxis” due to higher utilisation rates).
← 9. The 25 the percentile average wage was found to be USD 13.31 per hour. Note that the NYC minimum wage will rise to USD 15 per hour from end-2019, https://www.labor.ny.gov/workerprotection/laborstandards/workprot/minwage.shtm.
← 10. i.e. After payment of social security contributions and other charges paid by employers of wage-earning employees.
← 11. https://www.supremecourt.uk/cases/docs/uksc-2019-0029-judgment.pdf.
← 12. https://www.nytimes.com/2021/03/16/technology/uber-uk-drivers-worker-status.html.
← 13. Dynamex Operations West Pty Ltd vs Superior Court. https://scocal.stanford.edu/opinion/dynamex-operations-west-inc-v-superior-court-34584.
← 14. https://www.reuters.com/article/us-uber-california-drivers-iduskbn27805f.
← 15. https://www.latimes.com/business/technology/la-fi-tn-uber-ipo-lyft-fare-increase-20190511-story.html
← 16. See, for example: https://www.yalelawjournal.org/note/amazons-antitrust-paradox.
← 17. In the taxi context, the predominant body of case law comes from Ireland and follows the removal of supply restrictions in 1999. Other cases also come from the United States.
← 18. The decision was upheld on appeal to the European Court of Justice. An initial ruling concluded that ridesourcing services were transport services, rather than IT services, as Uber had argued. https://www.ft.com/content/317b96dc-3c96-11e8-b9f9-de94fa33a81e; https://curia.europa.eu/jcms/upload/docs/application/pdf/2017-12/cp170136en.pdf.
← 19. For a discussion of the Sao Paolo congestion charge, and its rationale, see (Biderman, 2018[34]).
← 20. Taxi licences, which had retained a residual value of around AUD140 000 after ridesourcing was legalised, are henceforth available on demand at administrative cost. At the same time, driver licensing has been integrated across the taxi and ridesourcing sectors and vehicle standards have been harmonised, with a number of previous taxi-specific standards eliminated.
← 21. https://nypost.com/2019/07/22/uber-says-de-blasios-ride-share-rules-hurt-poor-new-yorkers/.
← 22. Between March and August 2019, ridesourcing trip numbers fell approximately 15.7%, while taxi trip numbers fell 22.7%. See https://toddwschneider.com/dashboards/nyc-taxi-ridehailing-uber-lyft-data/.
← 23. https://vancouversun.com/news/politics/no-supply-caps-or-price-surge-restrictions-for-ride-hailing-companies-in-b-c.
← 24. The report of the “Task and Finish Group”: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/745516/taxi-and-phv-working-group-report.pdf. The government response is summarised here: https://www.inlinepolicy.com/blog/new-regulations-for-taxis-and-ride-hailing-in-the-uk.
← 25. As of August 2019, ridesourcing vehicles covered 1.9 trips of 18 minutes duration per active hour, for an average of 34.2 active minutes per hour, of 57% active time, while taxis covered 1.9 trips of 14.3 minutes duration, for an average of 27.2 active minutes per hour, or 45.3% active time. See: www.toddschneider.com.
← 26. https://www.nytimes.com/2018/11/19/technology/uber-growth-ipo-germany.html.
← 27. See http://www.businessinsider.fr/us/uber-lyft-rides-decline-after-new-york-minimum-wage-2019-7; www.toddschneider.com.