Taxi and private hire vehicle regulation: A briefing
8 December 2017
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This paper seeks to contribute to the deliberations of the Task and Finish
Group on Taxi and Private Hire Vehicle (PHV) licensing.
Summary
Price and quantity regulations, as well as statutory vehicle and driver standards, for the taxi and PHV sector have long been justified on grounds of imperfect information (OECD 2008). The nature of taxi markets in the pre-digital era was such that searching (finding and sorting through the available alternatives) and bargaining (negotiating a fare) could not be done in competitive conditions with adequate information. Providers would in many cases have a temporary monopoly on passengers. However, for a number of years it has been the case that technological advances have rendered much regulation obsolete. The emergence of platforms whose value proposition is precisely the reduction of transaction costs means that regulatory intervention is, in most instances, no longer needed. It is in the business interest of platforms to provide a safe, secure and friendly environment for drivers and passengers to interact.
Author Diego Zuluaga wrote for ConservativeHome following the release of this briefing.
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Group on Taxi and Private Hire Vehicle (PHV) licensing.
Summary
Price and quantity regulations, as well as statutory vehicle and driver standards, for the taxi and PHV sector have long been justified on grounds of imperfect information (OECD 2008). The nature of taxi markets in the pre-digital era was such that searching (finding and sorting through the available alternatives) and bargaining (negotiating a fare) could not be done in competitive conditions with adequate information. Providers would in many cases have a temporary monopoly on passengers. However, for a number of years it has been the case that technological advances have rendered much regulation obsolete. The emergence of platforms whose value proposition is precisely the reduction of transaction costs means that regulatory intervention is, in most instances, no longer needed. It is in the business interest of platforms to provide a safe, secure and friendly environment for drivers and passengers to interact.
Author Diego Zuluaga wrote for ConservativeHome following the release of this briefing.
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