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3 Taxis, Regulation, and the Rise of Transportation Network Companies
Pages 38-65

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From page 38...
... Taxi Regulation1 Taxicab owners, fleets, and drivers are sometimes governed by extensive regulations that cover nearly every aspect of taxi service, particularly in large American cities. Smaller and midsized cities tend to apply a lighter regulatory approach, more akin to restaurant or building industry health-and-safety regulation and with little cover age of service quality issues.
From page 39...
... , but what is perhaps unique about the taxi industry is that a single cab ride from an airport to the downtown of a large metropolitan area may pass through a half a dozen taxi-regulating jurisdictions, each with its own rules governing (or prohibiting) the ability of that cab to pick up other passengers after discharging the airport passenger.
From page 40...
... These concerns are particularly acute at airports. To address public safety concerns, regulations generally focus on background checks of drivers, vehicle inspections, and minimum standards for vehicle liability insurance -- topics treated in greater depth in subsequent chapters of this report.
From page 41...
... Regulators often conduct surveys of peer cities to assess where their city falls relative to others, with a particular view to how business and leisure travelers will perceive its taxi fares. Market Entry Two of the most controversial aspects of taxi regulation are entry and economic regulations, both of which extend beyond the realm of public safety and price setting.
From page 42...
... Open entry: There is no limit on the number of cabs. New companies and possibly individual drivers can obtain authority based on showing qualifications.
From page 43...
... These cities tended to have one or more fleets and few if any independent owner-drivers. Regulators built regulatory structures that relied on fleet owners to provide training and oversight of drivers and respond to public complaints.
From page 44...
... Cities with fleet operators who maintain service standards and resolve service complaints often have little active regulatory oversight other than licensing checks and vehicle inspections. Cities with chronic service quality problems, on the other hand, tend to see growth in the regulatory regime since market forces have been unable to rectify the problems.
From page 45...
... Studies of taxi service utilizing computerized company dispatch data have shown that cab companies tend to provide more service and have faster response times in certain areas of a city and, conversely, pick up fewer passengers and have longer response times elsewhere. This pattern has been documented in Boston (Nelson\ Nygaard Consulting Associates 2004)
From page 46...
... In New York City, which has substantial demand for dispatch taxi service throughout its five boroughs, more than 500 car service companies operate, each specializing in particular geographic and customer markets, in an open-entry system. While no one company provides prompt service throughout the city, service is apparently adequate enough that geographic service requirements have not been applied by local regulators.
From page 47...
... Several cities -- including Washington, D.C., and New York -- have established dispatch services to improve the response times of accessible vehicles. Several cities also have established funds paid for through industry or passenger fees to subsidize out-of-pocket capital and operating costs, as well as provide financial incentives to drivers.
From page 48...
... Airports have several unique characteristics that affect both how airport taxi service operates and how airports regulate it. Perhaps most important for regulation, access to airport property is controlled by the airport operating authority.
From page 49...
... Deregulation, Reregulation, and the Differences Between Dispatch and Walk-Up Markets During the 1970s, as the trucking, airline, and telecommunications industries were being deregulated, the idea that taxi deregulation would deliver similar benefits took hold. At the time, some economists predicted that unregulated entry and fares for taxi service providers would produce lower fares, a higher level of service to customers, and service innovations such as shared-ride services as new firms entered the market (Frankena and Pautler 1984)
From page 50...
... They must quickly build the size of their fleets in order to achieve the economies of scale necessary to provide competitive response times for telephone requests for service. Another factor was that demand in the telephone dispatch market was either stable or declining in the cities that deregulated (Teal and Berglund 1987)
From page 51...
... Because TNC drivers are using apps to connect with passengers and typically are prohibited from picking up street hails, the problems of driver oversupply at taxi stands encouraged by past taxi deregulation efforts are unlikely to recur with the rise of TNCs. On the other hand, these same apps overcome barriers to entry into the taxi dispatch market that have shielded dispatch fleets from competition.
From page 52...
... Many states and local jurisdictions that have begun regulating TNCs have followed the basic structure of California's approach (California Public Utilities Commission 2015) , which entails far fewer fees and requirements for these services than are imposed on the established taxi, sedan, and limousine industries in many cities.
From page 53...
... In July 2015, a judge ruled that the California Public Utilities Commission can charge Uber $7.3 million for refusing to provide all required data, including the number of customers requesting accessible vehicles, the number of rides in each zip code, and the cause of each incident involving an Uber driver (Carson 2015)
From page 54...
... The Washington, D.C., taxi commission reported that total taxi trips in the city were down 10 percent in the first year of TNC operation (Di Caro 2014) , although both taxi company managers and individual drivers described their business as down by at least 20 percent (Ham 2014)
From page 55...
... have been replaced by shorter trips. box 3-2 Fare Comparisons Between Taxi Service and Transportation Network Companies News articles and reports have often described TNC fares as generally lower than those of taxis, particularly during periods when so-called "surge pricing" is not in effect.
From page 56...
... box 3-2 (continued) Fare Comparisons Between Taxi Service and Transportation Network Companies
From page 57...
... As of this writing, this lawsuit was in its early stages. Declining medallion value has clear implications for medallion owners -- they lose wealth -- but less clear implications for taxi drivers.
From page 58...
... Ultimately, because the interests of medallion owners and taxi drivers are not aligned (an owner doing well means a driver paying a higher lease rate) , declining medallion values could also lead to falling lease rates, in turn raising the possibility that net taxi driver income could rise.
From page 59...
... To the extent that taxi drivers could earn back some lost revenue through TNC work, the TNCs might not be a pure loss for them. However, TNC employment might not be an option for all taxi drivers.
From page 60...
... TNC drivers can operate throughout a metropolitan area as a unified market, picking up and dropping off passengers with uniformity and transparency to consumers that are lacking in the taxi industry. Competing considerations are entailed in achieving, on the one hand, uniformity and simplicity in the regulatory structure (which tends to argue for regional or even statewide regulatory authorities)
From page 61...
... As innovative mobility service companies become an increasingly important component of urban transportation networks, such information becomes essential for both regulation and transportation planning purposes. In general, little accurate and aggregated information is available about how jurisdictions across the country are balancing the interests of and regulating both traditional and innovative mobility service providers.
From page 62...
... 2015. Transportation Network Companies.
From page 63...
... 1996. Taxi Industry Regulation, Deregulation, & Re-regulation: The Paradox of Market Failure.
From page 64...
... 1992. Evaluation of Alternative Arrangements for the Provision of Airport Taxi Services.
From page 65...
... 2015. The Uber Effect: Seattle Taxi Industry Revenue Dipped 28% in Past 2 Years.


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