4 ms·

The idea behind regulating personal transportation, aka taxis is because of the big external effects. If there was a free, unregulated market for taxis, obvious

by jcfrei 12y ago

The idea behind regulating personal transportation, aka taxis is because of the big external effects. If there was a free, unregulated market for taxis, obviously fares would be much lower and there would be much more taxis on the streets. However this in turn decreases the experience for the individual passenger (more traffic leads to longer rides) and much more importantly causes traffic lags for all other users of the road - most notably for the transportation of goods. So while a completely liberated taxi market might work out for the passengers (especially outside of rush hours) it most likely won't work out for the economy at large. This is an inherent problem when you have a liberal market (transportation) which uses a publicly owned good (the streets) which can't be priced appropriately (or only in a limited way - see London).

cromwellian 12y ago
But doesn't fewer taxis also mean longer waiting times to get a taxi, and encourage an increase in private car ownership, replacing taxis on the road with private drivers driving themselves? Won't one Uber driver replace many cars on the road, especially as the price is driven down, the cost of using Uber makes owning a car less appealing in many locales? Rather than ban Uber, they could just implement taxes, just like Uber implements real time surge pricing. The tax could be tied to congestion. Uber would pass these onto consumers, prices would rise, and presumably demand for drivers would equalize with how much time and money people collectively would be willing to pay.
- seanp2k2 12y ago
  Fwiw, congestion tax is already a thing: http://en.m.wikipedia.org/wiki/Congestion_pricing http://en.m.wikipedia.org/wiki/Congestion_pricing
- jcfrei 12y ago
  I agree; real time surge pricing for congested roads would be the optimal solution. But just imagine the outcry in the population when you try to implement road charges for all inner city roads. This is another example of an economically perfectly sound concept which is in many parts of the world politically completely unfeasible (at least for the moment). On top of that, couldn't you argue that transportation is a basic human right? If so, you would have to either discriminate against the poor or adjust the rates based on income, which again makes this a politically very hot and difficult topic.
  - drivingmenuts 12y ago
    > real time surge pricing for congested roads would be the optimal solution. Except where people are too poor to afford surge pricing, even though they may need to travel just as much as anyone else. Libertarianism is great right up to the point where you actually need something you can't afford, like medical care or travel to a job. Then it's pretty much a big FU because you're not profitable.
    - tormeh 12y ago
      The problem is that mainstream economic theory assumes your utility to society is equal to your income and therefore discriminating based on income is an optimal strategy for society. Of course, wages are about negotiation power, not utility. It's so misguided it's bizarre.
    - SilasX 12y ago
      This comes up every time someone suggests pricing a scarce good (either with Pigovian taxes or privatizing a scarce resource), but it has an easy solution: [p]rebate everyone the amount of tax they would pay for poverty level consumption of the resource. That preserves all of the incentives to cut back on a marginal unit, without penalizing someone for being poor. Facing economic realities doesn't mean keeping staying with systems that rewards the wrong thing.
  - avn2109 12y ago
    Idea: In the same way that the Alaska Permanent Fund has created a vocal pro-industry constituency out of nothing (aka the residents of Alaska, who are paid from extractive revenues), maybe we could drum up political support by distributing the revenues directly to the people. As in, "Dear Mr. Smith, you live here, therefore here is your monthly check for your share of the dynamically-priced congestion tax revenues that we collected on your behalf. Have a nice day." That might be more palatable than "We invisibly 'lowered' your tax bill elsewhere, Mr. Smith."
  - innguest 12y ago
    Interesting how you ended up reaching the libertarian conclusion. If roads were private (and in places where they are we do see this) you can change the charging fee based on time of day, congestion, etc, and optimize it in such a way as to keep the traffic flowing. No way to do that when things are public.
HackinOut 12y ago
Thanks for the insight. Seems fair to regulate publicly owned goods. Maybe the problem is that the regulation is too dumb? For example it could encourage taxis at night (like many have said Paris at night is terrible and taxis are way too expensive), or be based on congestion like cromwellian suggested?
baddox 12y ago
I find it extremely hard to believe that an artificial shortage reduces externalities.
xorcist 12y ago
> If there was a free, unregulated market for taxis, obviously fares would be much lower and there would be much more taxis on the streets. Why are you guessing? There is real data on this.mThere used to be regulated pricing for taxis in Stockholm, Sweden. Now it is an unregulated market ("free" as they like to call it). The result is well documented. Prices remain the same, availability is up, but overall it's been an unpopular change. Any of the independent riders will rip off tourists at the first chance they get, scamming them for as many thousand dollars they can get away with, by inventing complicated fee structures. Police will do nothing as it is (currently) legal.

by jcfrei 12y ago

cromwellian 12y ago

But doesn't fewer taxis also mean longer waiting times to get a taxi, and encourage an increase in private car ownership, replacing taxis on the road with private drivers driving themselves? Won't one Uber driver replace many cars on the road, especially as the price is driven down, the cost of using Uber makes owning a car less appealing in many locales? Rather than ban Uber, they could just implement taxes, just like Uber implements real time surge pricing. The tax could be tied to congestion. Uber would pass these onto consumers, prices would rise, and presumably demand for drivers would equalize with how much time and money people collectively would be willing to pay.

seanp2k2 12y ago
Fwiw, congestion tax is already a thing: http://en.m.wikipedia.org/wiki/Congestion_pricing http://en.m.wikipedia.org/wiki/Congestion_pricing
jcfrei 12y ago
I agree; real time surge pricing for congested roads would be the optimal solution. But just imagine the outcry in the population when you try to implement road charges for all inner city roads. This is another example of an economically perfectly sound concept which is in many parts of the world politically completely unfeasible (at least for the moment). On top of that, couldn't you argue that transportation is a basic human right? If so, you would have to either discriminate against the poor or adjust the rates based on income, which again makes this a politically very hot and difficult topic.
- drivingmenuts 12y ago
  > real time surge pricing for congested roads would be the optimal solution. Except where people are too poor to afford surge pricing, even though they may need to travel just as much as anyone else. Libertarianism is great right up to the point where you actually need something you can't afford, like medical care or travel to a job. Then it's pretty much a big FU because you're not profitable.
  - tormeh 12y ago
    The problem is that mainstream economic theory assumes your utility to society is equal to your income and therefore discriminating based on income is an optimal strategy for society. Of course, wages are about negotiation power, not utility. It's so misguided it's bizarre.
  - SilasX 12y ago
    This comes up every time someone suggests pricing a scarce good (either with Pigovian taxes or privatizing a scarce resource), but it has an easy solution: [p]rebate everyone the amount of tax they would pay for poverty level consumption of the resource. That preserves all of the incentives to cut back on a marginal unit, without penalizing someone for being poor. Facing economic realities doesn't mean keeping staying with systems that rewards the wrong thing.
- avn2109 12y ago
  Idea: In the same way that the Alaska Permanent Fund has created a vocal pro-industry constituency out of nothing (aka the residents of Alaska, who are paid from extractive revenues), maybe we could drum up political support by distributing the revenues directly to the people. As in, "Dear Mr. Smith, you live here, therefore here is your monthly check for your share of the dynamically-priced congestion tax revenues that we collected on your behalf. Have a nice day." That might be more palatable than "We invisibly 'lowered' your tax bill elsewhere, Mr. Smith."
- innguest 12y ago
  Interesting how you ended up reaching the libertarian conclusion. If roads were private (and in places where they are we do see this) you can change the charging fee based on time of day, congestion, etc, and optimize it in such a way as to keep the traffic flowing. No way to do that when things are public.

HackinOut 12y ago

Thanks for the insight. Seems fair to regulate publicly owned goods. Maybe the problem is that the regulation is too dumb? For example it could encourage taxis at night (like many have said Paris at night is terrible and taxis are way too expensive), or be based on congestion like cromwellian suggested?

baddox 12y ago

I find it extremely hard to believe that an artificial shortage reduces externalities.

xorcist 12y ago

> If there was a free, unregulated market for taxis, obviously fares would be much lower and there would be much more taxis on the streets. Why are you guessing? There is real data on this.mThere used to be regulated pricing for taxis in Stockholm, Sweden. Now it is an unregulated market ("free" as they like to call it). The result is well documented. Prices remain the same, availability is up, but overall it's been an unpopular change. Any of the independent riders will rip off tourists at the first chance they get, scamming them for as many thousand dollars they can get away with, by inventing complicated fee structures. Police will do nothing as it is (currently) legal.