This is what a free market looks like:

Although precise District-wide data is not available, taxicab company managers and individual drivers said their business is down at least 20 percent — and in some cases much more — because they cannot compete with the unregulated, low-price competition of UberX.

One of the primary differences between UberX and a D.C. taxicab is the way rides are summoned; passengers order UberX through Uber’s smartphone app while taxicabs are hailed on the street, but taxi operators say UberX drivers are increasingly picking up street hails, further eroding their tenuous customer base.

“We’re down 22 percent,” said Jeff Schaeffer, the president of District Cab and 15 smaller taxicab fleets that total 600 vehicles, referring to revenue produced by backseat credit card transactions in cabs that were hailed on the street.

“Dispatch is down 20 percent as well,” Schaeffer added. “Dispatch trips have decreased steadily over the last year. In Northwest Washington, in certain areas that ridesharing services target, you can see trips are down.”

The DC Taxi Commission denies any large shift to ride-sharing over cabs, and data is rather hard to directly compare because Uber and Lyft don’t release it. But anecdotal evidence from cab company owners, drivers, and from everyone I know who used to take cabs suggests that there is truth to this storyline. Unfortunately, some of this shift is going to hurt individual cab drivers, some of whom have opted to become ride-share drivers instead, according to my unofficial survey of my own Uber an UberX drivers. But the loss to cab companies comes from something— they offer a demonstrably worse product, often for more money than their competitors. Most every person I know in the D.C. area (and in all the other cities where Uber and Lyft are competing) can tell you many a cab horror story. Despite being under the “regulatory structure” they complain Uber is not, actual ride experiences are reliably far worse with cab companies. And, they’re not exactly winning hearts and minds with their tactics to beat Uber and Lyft. That reservoir of ill will was just waiting on someone to come in and give another option, and people heartily embraced it.

Eli Lehrer and Andrew Moylan have more in a policy paper for National Affairs. It’s called “Embracing the Peer Production Economy” and calls such shifts a “godsend to the political right” because “[r]epealing archaic laws and regulatory standards, reducing professional-licensing requirements, relying more heavily on price signals than command-and-control regulation, and restricting costly tort claims” are among the goals of the center-right. But the paper also sheds some light on the limits of the peer-to-peer economy while offering policy ideas for optimizing it:

Just as with prior economic innovations, however, there are some natural limits to the benefits that peer production can provide. Bed and breakfasts, so-called “gypsy” cabs, clothing swaps, and short-term rental agreements all long predate the internet and smart phones, yet none have been sources of tremendous economic value. So for a true peer-production revolution, services like Uber and Lyft, for instance, would need to not merely replace taxis; they would have to significantly expand the market for on-demand transportation services.

Similarly, by allowing people to work for themselves with relatively small capital inputs, peer-production platforms offer a path toward upward mobility for those with little money or formal education. But the work ethic and skills necessary to truly lift oneself up in the peer-production economy are similar to those needed in any other economic sector. For example, an internal Airbnb survey found that over half of the hosts in the expensive San Francisco and New York markets relied on income produced by short-term rentals to subsidize their housing costs, suggesting that services like these offer some the ability to enjoy a better quality of life. But most people do not want to take strangers into their homes or serve as taxi drivers, and some who try these things will almost certainly find they lack the skills, motivation, or engagement to do them well…

They also clearly have very significant negative consequences for incumbent producers. Just since late 2013, the market for rationed taxi medallions in cities like Chicago and New York (where the price of a medallion briefly topped $1 million) has appeared to be seriously undermined, with auctions for new medallions failing to attract bidders and transactions of existing medallions essentially ceasing. Hoteliers in construction-unfriendly, high-density cities like San Francisco also have complained about space-sharing services, calling on municipalities to crack down by enforcing laws originally passed to deal with slumlords and brothels.

Some of these revolts by incumbent producers have crossed the line from policy advocacy to direct action, such as when Washington, D.C., and London cabbies blocked traffic for days to protest ride-sharing. Because the cab drivers lack a defensible argument for why their monopoly should be legally protected, it is easy to dismiss these protests, and the public largely has.

But some of the other complaints against peer-production firms potentially have more force. Underground restaurants opened in people’s homes really do leave customers without the security of regular inspections and food-sanitation certificates. A number of these supper clubs specialize in relatively risky foods like raw milk and sushi — as at least two home-based restaurants in San Francisco did during one week in July 2014. These sorts of services may genuinely raise public-health and safety concerns. What’s needed is a legal framework in which peer-production services may thrive and grow, but where the legitimate public-policy interests of preserving public health and standards of safety and protecting individuals from fraud are maintained.


The D.C. Commission is set to regulate soon:

The D.C. Council is expected to take up legislation in the next few weeks that is designed to create a regulatory structure within which the “ridesharing” services will operate, but UberX will not be leaving D.C.

“I’m not sure the council knows how to regulate them,” said Schaeffer, who said the District should limit the number of “ridesharing” vehicles allowed on the streets.

Legislation being drafted by D.C. Council member Mary Cheh (D-Ward 3) is expected to require either “ridesharing” drivers or their companies to obtain primary commercial liability insurance for at least part of the time they are on the road, and to conduct more stringent background checks, among other measures.

Meanwhile in Salt Lake City, where I’m a bit surprised to see them fighting a free-market option so hard (with $6,500 tickets!), they send out secret shoppers to rat on Uber and Lyft drivers. But sometimes that backfires, as illustrated by this report on Lyft from a secret shopper obtained via FOIA by the Libertas Institute:

My experience with the Lyft app was a very positive one. I really enjoyed how quickly I was able to get a ride compared to using the three available taxi companies in Salt Lake. Usually, especially on a weekend, it could take 10-20 minutes to just get through to a taxi company (Yellow, City, and Ute) to request a ride. Then, you are waiting another 10-30 minutes for the ride to even show up. With the Lyft app, I was able to secure all rides with a quick click of a button. Then, all rides showed up within 2-5 minutes.

Another aspect of the Lyft app that I enjoyed was being given ALL of the drivers information up front. The app provides the rider with a picture of the driver and their vehicle. It also provides you with the drivers name, the vehicle’s make, model, color, and year, and also the vehicle’s license plate. At times, as a women riding alone, I do not feel comfortable or safe riding in a taxi (especially if it is one that is not part of the three major companies). However, being provided with ALL of the driver’s information (especially the license plate), made me feel comfortable. Being provided with that information up front, I knew that if I ever felt real fear of being in danger, I could easily pass that information along to family members or use it as leverage. With other cab companies, that information is something that you would have to obtain yourself. And, most taxi drivers (at least from my experience) are not very willing for you to ask their name or any other valuable information you might need to feel safe.

Also, being able to request a ride and pay for that ride with my phone was extremely convenient. The receipt was emailed to me and I was given all of the information from the ride, including trip length and time. Some of the time, you can’t even get a regular taxi driver to give you a receipt at all, especially not a detailed one. The Lyft app definitely provides a lot of detail to the rider and I really enjoy that.

If given the opportunity, I would always use the Lyft app over the regular taxi companies. The drivers are friendlier, I felt safer, and the process was about 100x easier and faster.