Disruptive innovation
Taxi drivers must jump through extensive regulatory hoops in an effort to ensure that passengers are traveling in safe, reliable vehicles. The sometimes exclusionary expenses associated with getting a taxi license. Taxi drivers and taxi companies don't fully foot this bill. It's passed on, indirectly, to consumers in the form of higher rates, poorer customer service as the result of less competition in the marketplace, and potentially dirtier taxis, also a result of less marketplace competition.
Ridesharing companies have emerged in recent years to solve some of the issues in this transportation market. Companies like Uber, Lyft, and Rideshare have developed apps that allow individuals to reserve transportation from their drivers by simply submitting a request through a smartphone application and getting picked up minutes later. Consumers benefit from less expensive fairs, better customer service, and potentially cleaner cars using these systems.
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Still, some regulators raise concerns about the safety of this dynamic solution to the taxi problem. Efforts are being made to regulate these new companies and make them adhere to the same or similar regulations traditional taxi companies must adhere to. Safety concerns have been raised given some early issues some riders experienced although all said companies require thorough background checks before drivers are hired.
Others applaud the companies' efforts which may help people consume fewer resources and provide more options for those needing transportation.
Duke University's Michael Munger recently spoke about the benefits of these rideshare organizations in his presentation on the sharing economy when he visited Strata in September.
My guess is that rideshare programs are here to stay. They will grow and evolve in major metro areas where they'll naturally thrive best with limited regulations.
Photo credit: "Taxi" by Moyan Brenn is licensed under CC BY 2.0. Image was cropped, desaturated, and softened.