Protectionist Barriers to Entry — Regulations Target Uber to Reduce Competition and Consumer Choice

Yesterday, the DC Taxi Commission held hearings on new regulations that would help to put a burgeoning startup company out of business, along with imposing massive hurdles that would stop any new business in the transportation industry getting off the ground.  The company being threatened is Uber, an innovative new company that allows users to summon a car service to their location using their smartphone.  Uber is seen as a threat to the entrenched DC cab companies, as they offer a competing service that is widely seen as more comfortable, friendlier and cleaner than the traditional cab services in Washington, DC.  They also accept only credit cards, a stark contrast from the inconvenience of the DC cabs that are cash-only.

The new regulations being discussed are almost certainly a direct result of Uber challenging the dominance of the DC cab companies. In an attempt to protect their business, the cab companies are finding great success in lobbying DC government to protect their business through the force of government, a clear case of crony capitalism as far as an unbiased observer would certainly say.

The regulations have nothing to do with safety or service, a concern that the DC Taxi Commission should have.  Instead, the regulations do things such as prevent any sedan businesses with fewer than 20 cars from operating and require all sedans to install regulated taximeters (something that is covered by Uber by using a simple smartphone app) that produce paper receipts.

These regulations can only be seen as a way to keep competition out of the market.  After all, how could the number of cars in a company’s fleet impact safety or quality of service?  And all Uber customers understand they won’t get a paper receipt; they do cabs one better—they email you your receipt.

You’ll remember that this isn’t the first time the DC Taxi Commission has gone after Uber.  A few months ago, the Taxi Commission tried to impose a minimum fare that all car services had to impose, artificially inflating prices for consumers all to ensure that cab companies would reap the benefits.

When government works to protect incumbent industries, it stops new businesses from creating new jobs, harming the economy and harming consumers who are looking for the best possible service or product for the best possible price.  Megan McArdle, in a column in The Daily Beast, writes about a limo driver who had just purchased a brand new sedan to strike out and start his own business, something that Uber had enabled him to do (Uber doesn’t have their own fleet—they connect individual drivers with consumers).  If the DC Taxi Commission has their way, that driver’s investment will be for naught and his small business will go up in flames. And for what?  To protect an industry that has obviously been unable to innovate and to ensure that the poor service consumers currently receive continues. The DC government needs to keep their hands out of the market, stop the crony capitalism, and allow consumers to decide which companies will get their business.

Zack Christenson is a digital tech writer for the American Consumer Institute

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One thought on “Protectionist Barriers to Entry — Regulations Target Uber to Reduce Competition and Consumer Choice

  1. If the DCTC came to Uber and asked them to create a service to improve the taxi service in DC, I bet Uber would be more than happy to do it. Uber is innovative and they seem to care about the general well being of peoples lives. Uber would still profit and the cabbies of DC could be more effective, but the DCTC is ran by a bunch of greedy thugs. Changes might result in a loss of a few dollars coming into their pockets.

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