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Comment by justinsb | Hacker News Reader

However you feel about it, this is entirely expected. The government has chosen to regulate taxis; there's a whole bureaucracy around that; there are a bunch of providers operating within the system. Uber enters and claims the rules do not apply to it, and threatens to replace the regulated market entirely. The regulators are now faced with the choice between ending all taxi regulation, regulating Uber like a taxi, or simply excluding Uber from the market entirely. If they do nothing, they know that Uber will likely replace taxis, leaving an unregulated market. If they wanted an unregulated market, they wouldn't have regulated it in the first place.

When your business is based around regulatory arbitrage, you have to know that you will only enjoy that advantage for a limited window.

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You're one removed from the actual decision makers. The real decision makers are the elite who own the licenses for the taxis. In my city, there are two families who have the bulk of the licenses and if I am not mistaken, 100% of the share of licenses for taxis allowed to operate at the airport. If you think this is about regulation, you are sorely mistaken. Or another way to think about it: regulation is about protecting profits, not consumers.

Regulation is what starts the ball rolling. I won't dispute that the outcome is often sub-optimal in some ways (like the one you cited) But the point is that the result is a whole apparatus which acts to preserve the status quo: the regulators themselves (who like being employed), the operators that are profiting from the system, etc.

I'm trying to stay away from the political hot potato of whether taxi regulation is a net positive thing or not! It's not really relevant to the point I'm making.

Whether it's profit or bureaucracy that are the drivers now, I think we agree: Uber must have known this was coming. I look forward to seeing what Uber has planned; perhaps operating a dispatch service over regular taxis?

I think your analysis is correct. It seems likely they will be forced to integrate and become a taxi service dispatch infrastructure provider. It seems a smarter move to accept how "sub-optimal" markets such as these have become and deal with unreality on it's terms than to resist the corruption outright on principal.

They can't integrate -- it's the whole point of the corruption, to maintain a cartel with limited supply, so as to inflate prices and profits. They don't want them to operate "within the rules" -- they want them to not operate, period.

No new taxis in D.C.:

The supply of cabs is limited by a licensing exam for drivers that's been closed since 2010.

http://reason.com/blog/2011/12/22/the-medallion-bill-is-back...

From an article about D.C.'s plans to establish explicit supply caps (quotas), like the ones already in place in NYC, SF, etc.

TaxiMagic seems to be operating without any government interference, by integrating with the existing taxi services.

They can integrate if they can make a successful bid to join the cartels or gain significant leverage with the uber-cartels ( governmental entities ).

Do you guys even have any idea why taxis are regulated in the first place?

During the Great Depression, many taxi drivers drove unsafe cars. There were many accidents involving unlicensed drivers of unmaintained cabs. The medallion system was introduced to improve the safety of taxis by imposing minimum capital requirements, i.e., the cost of purchasing/renewing the medallion, and ongoing compliance requirements (insurance, vehicle maintainence, etc.).

Uber has not negated the underlying justification for the medallion system. All it has done is to take all of the risks that taxi companies normally accept and push it on to the drivers and passengers. Uber's disruptive edge is essentially its exploitation of its customers/service providers.

When your business is based around exploiting the financial naivete of others, you have to know that you will only enjoy that advantage for a limited window.

Safety regulations are logically distinct from fare regulations. No one would use the fact that the US government sets food health rules with the FDA as a reason for them to set food prices.

Price regulations are often linked to safety regulations. You specify minimum prices to enable the service providers to afford the safety regulations.

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