Though traditional taxis’ strategy has primarily been to try to use the power of government to prevent drivers and customers from using services like Uber and Lyft, with mixed success, the competition these services have introduced has nonetheless forced taxis to make changes in their own service. While competing on price is difficult since taxi prices are highly regulated, typically at the behest of the big taxi companies that stand to gain financially from preventing competition, taxis can more readily compete by improving the quality of the ride they offer.
Wallsten’s study of taxi complaints in New York City and Chicago before and after Uber’s entry into the market provides evidence of this. “The data reveal that the number of complaints per taxi trip in New York City has declined along with the growth of Uber, even when controlling for underlying trends and seasonal events that may affect taxi use,” he concluded.
“The results suggest that customers who used to complain now take their business elsewhere and that taxi drivers are responding to competition from Uber by increasing the quality of their own service. Data from Chicago also provide some evidence that cab drivers respond to competition. In particular, in Chicago the growth of Uber was correlated with fewer complaints by taxi riders about heating and air conditioning, broken credit card machines and rude drivers,” Wallsten said.
Note that even those who do not use services like Uber and Lyft benefit from the higher-quality taxi rides their competition fosters. This is all the more reason for government to take a hands-off approach to regulation, particularly regulation proposed by those who stand to benefit from it, and allow the free market to offer the greatest incentives for companies to innovate and best serve their customers.
©2016 The Orange County Register (Santa Ana, Calif.) Distributed by Tribune Content Agency, LLC.
