LAW & ECONOMICS: TAXI INDUSTRY - CAPPING - RETAIL PRICES - SPECIFIC BUSINESS REGULATIONS - TAXI LICENSES - EMPIRICAL STUDY ON RELEVANT FRENCH DATA

Regulation, deregulation and competition: The case of the taxi industry

KEYWORDS

The taxi industry is highly regulated in France, through a capping of the number of plates, retail prices or specific business regulations. Nevertheless, this market does not appear to always function well, as illustrated by several Competition Authority decisions, or by recent critics expressed in the Attali report on “Freeing French Growth”, which generated a strong reaction by taxi drivers. We try to shed some light on this particular market in three ways. First, we review the insights of economic theory on this topic, and then we present the reforms undertaken in different countries, highlighting their successes but also their shortcomings. Lastly, we provide the results of an empirical study on relevant French data. This study estimates a crucial parameter for any gradual reform : the increase in demand generated by an increase in the availability of taxis. We conclude that, on average, the elimination of the rent of taxi plate holders due to entry restriction would require at least an increase of the number of taxi licenses by 75%. The institutions of the authors can not be held liable of the views expressed here.

*This article is an automatic translation of the original article, provided here for your convenience. Read the original article. 1. The taxi market is a striking example of the inefficiency of certain markets in the absence of regulation, but also of the inefficiency of public intervention when it comes to regulating them. Indeed, although this market has a number of shortcomings, the interventions of regulators to correct them have often consisted of back and forth between regulation and deregulation, without an effective solution, which can be applied in all cases, having been imposed. 2. This difficulty is due to three factors. Firstly, this topic has given rise to much debate in economic theory, as the ways in which supply and demand for taxis meet differ from the usual economic

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