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Focus Ride-Hailing Policy on Consumer Benefits, Not Protecting Competitors

As we pointed out last year when New York City attacked Uber, Lyft, and other ride-hailing firms by imposing an interim supply cap, politicians fighting these new entrants to the urban transportation sector ignore the harms their protectionist policies do to their constituent consumers.

A great piece of investigative reporting that appeared in The New York Times over the weekend (Part 1 and Part 2) shows in painful detail how New York City’s taxicab medallion regime—the legacy licensing system New York politicians tried to desperately revive last year by capping Uber and Lyft—was set up for failure by these same politicians. Uber and Lyft were convenient scapegoats, but the real causes of chaos in the taxicab industry were the industry itself and its regulators. Most suffered, but a politically connected few reaped enormous benefits. This is what happens when consumers aren’t placed first in the urban mobility debate.

In Taiwan, officials there have similarly proposed two anti-consumer regulations by claiming they are combatting predation from ride-hailing firms and protecting their incumbent taxicab industry. The first rule would require that ride-hailing vehicles must return to the garage prior to being dispatched to another trip. The second would outlaw trips under one hour. The American Institute in Taiwan provides more detail in its comment letter opposing the proposed rules.

As anyone who has taken a ride by Uber, Lyft, or similar service instantly realizes, these regulations would be a de facto prohibition on ride-hailing providers, which primarily serve short-distance intraurban riders. Taiwan’s minister of transport and communications has reportedly told ride-hailing firms to encourage their drivers to become traditional taxicab drivers, but has not provided any guidance as to how this would be accomplished.

As in New York, Taiwan’s regulators are placing consumers last in their efforts to protect incumbent taxicab competitors. The goal should be to provide the greatest level of service for the greatest number of customers at the lowest cost. Prohibiting innovation in a desperate attempt to preserve the past may enrich a small number of well-connected businessmen and politicians, but as we saw in New York, this casual corruption will likely wind up hurting everyone else—drivers and riders alike.