Taxis

Competition Wins Out: Long Beach Drops Minimum Cab Fares in Response to Uber

Reductions in regulations benefit consumers.

|

"But what about mustaches? When can we put mustaches on our cabs?"
Credit: blu-news.org / photo on flickr

One of the ways the taxi cartels have responded to the incursions of ride-sharing services is to point out all the municipal regulations that tie their hands and keep them from being able to react in a typical free-market fashion. Taxis typically cost more than ride-sharing services, but that's because they have their rates are controlled by city government, not the taxi industry.

Of course, that argument completely ignores the role that the taxi cartels have had in creating such regulations and the bed they've thoroughly made for themselves in order to control this industry. But never mind that. Blame aside, it is factually true that taxi companies are not able to compete against companies like Uber and Lyft on its own terms. The solution, as many have argued, is not to burden ride-sharing services with more regulations but to remove oppressive regulatory control over taxi services. We've seen it in some states and cities that have gotten rid of limits on how many cabs can operate in communities.

This week Long Beach, California, took a new path. Its City Council voted unanimously yesterday to eliminate its minimum price for a taxi ride and to allow taxi companies to offer free and discounted rides. From the Los Angeles Times:

The vote makes Long Beach the first major U.S. city to eliminate the price floor that prevents taxi drivers from providing free or discounted rides. The maximum price remains unchanged. 

Yellow Cab officials said the shift would help its drivers better compete against Uber and Lyft. Both services set fares based on supply and demand. During periods of high demand, called "prime time" or "surge pricing," the companies raise prices to coax more of their drivers onto the roads. Discount codes are also common. 

As in most cities, taxi fees in Long Beach are set by city regulators, and do not fluctuate. Cabs charge a base fare of $2.85, plus $2.70 per mile. The policies were put in place to protect customers years ago, officials say — before Uber and Lyft existed.

"Taxicabs have had no opportunity to experiment and fail, or experiment and succeed," said William Rouse, the general manager of Long Beach Yellow Cab Cooperative Inc. "We as an industry find ourselves the reluctant participants in one of the great public policy debates that is going on today."

Note how the story simply allows the assertion that these policies were developed to "protect customers" without challenging or even engaging in this claim in any fashion. I find this to be remarkably typical of taxi vs. ride-share reporting. If it were true, why are customers aching for market alternatives?

Anyway, Long Beach is still keeping a cap on the number of taxis permitted to operate in the city, though they've increased the limit from 175 to 199. It's a mixed bag, but still an improvement.

NEXT: Selfie-Taking Drone Could Be Good for Political Activists

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  1. How does having a minimum price for a taxi ride help consumers? I mean, other than FYTY?

    1. To be consistent, it should be FUTY.

    2. Race to the bottom, stabilize the market, or some such bullshit.

    3. There needs to be a floor on taxi prices to avoid the dreaded “race to the bottom” that would see taxi companies slashing costs by raping, robbing, and murdering their customers – you know, the same way every capitalist enterprise does when they attempt to compete on price.

    4. If you don’t have a price floor – business makes up in volume – volume requires speed – speed = flaming death and carnage on our streets.

      1. Sorry, too much sapho juice.

        1. What the hell is a sapho?

  2. Note how the story simply allows the assertion that these policies were developed to “protect customers” without challenging or even engaging in this claim in any fashion. I find this to be remarkably typical of taxi vs. ride-share reporting.

    How often do news stories ever challenge the veracity of official statements? Even transparently false ones?

    1. Challenging the veracity of official statements is work, you would need to hire people capable of thinking and analyzing arguments to do such work. Reporting “Today, the White House announced that one plus one equals three” takes no thought to report and it is a true reporting of the facts – the White House did indeed say it. You can get a moderately intelligent monkey or a member of the Sheen family to do that sort of reporting. Explaining why the White House is wrong and analyzing why they might have made such an obviously wrong statement is harder.

      1. It’s not about work or the lack of desire to do it. It requires the underlying skepticism about what’s being uttered. If you’re COMPLETELY on board with the official statement, you’re not going to question it.

  3. Yay for the LBC. I feel freer today than ever in my life!

  4. So, bets on how long before Long Beach is SOMALIA??

    /crony derpitalist

  5. They r coming to take r jerbz!

  6. I admit I’m surprised. Pleasantly.

    Of course, that argument completely ignores the role that the taxi cartels have had in creating such regulations and the bed they’ve thoroughly made for themselves

    Like the blueberry farmers who want out of the market protection racket ?

    1. And raisins!

      1. And shrimp!

        Yeah, that’s what I meant, raisins. Don’t know where I got blueberries from.

        1. Usually a grocery store, farmer’s market, or roadside stand. Occasionally by picking them yourself.

  7. But how does this affect parking near the bars?

    1. parking near bears is not covered by taxicab or rideshare services’ insurance. don’t think you can even take rentals or leased vehicles to the bear park.

  8. Yellow Cab boss says, “We as an industry find ourselves the reluctant participants in one of the great public policy debates that is going on right now.”

    He ain’t lying there. They didn’t want to participate in any kind of policy debate. They wanted to maintain their government enforced monopoly without anyone having any chance to argue.

    I would appreciate the honesty if it wasn’t clearly accidental. Seems pretty silly combined with his previous statement about not having the opportunity to experiment.

  9. The maximum price remains unchanged.

    Who will protect the people who don’t want to walk 4 blocks in the rain from $50 Uber fees?

    Huh? HUH?

  10. Start making cash right now… Get more time with your family by doing jobs that only require for you to have a computer and an internet access and you can have that at your home. Start bringing up to $8596 a month. I’ve started this job and I’ve never been happier and now I am sharing it with you, so you can try it too. You can check it out here…
    http://www.work-cash.com

  11. I started with my online business I earn $58 every 15 minutes. It sounds unbelievable but you wont forgive yourself if you don’t check it out.
    For information check this site. ????????? http://www.jobsfish.com

Please to post comments

Comments are closed.