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ueregua1i; Re f e.ff Prepared for the International Taxicab Foundation 3849 FarrogutAvenue Kensington,Maryland 20895

Preparedbj Price Waterhouse Officeof GovernmentServices Washingurn,DC

November8, 1993

$25 for ITF & 1TLAMembers $50 for Non-Members

© InternationalTaxicabFoundation Officeof GovernmentServices Telephone2022960800 1801KStreet,N.W. Washington,DC20006

PriceWaterhouse

8 November, 1993

Mr. Alfred LaGasse Executive Vice President International Taxicab Foundation 3849 Farragut Avenue Kensington, MD 20895

Dear Mr. LaGasse:

We are pleased to submit this final report documenting our findings from an analysis of taxicab regulation and re-regulation that we performed on behalf of the International Taxicab Foundation.

Our findings rest on research methods described in Section 1 of the report, which rely on three data sources: (i) past ease studies of taxi deregulation, sponsored by the U.S. Department of Transportation; (ii) taxi fare and license data for individual cities, made available by the International Taxicab and Livery Association; and (iii) telephone surveys of public officials in cities that implemented taxicab deregulation, conducted by Price Waterhouse. Price Waterhouse has not independently audited data from the first two sources, although we have no reason to believe the data have any characteristics that would invalidate our findings.

Our report concludes that the effects of taxi deregulation have ranged from benign to adverse, depending on local markets and conditions. This is a departure from the experience with deregulation in other industries and is influenced by taxi market imperfections that reduce or remove incentives for price and service quality competition. Consequently, we found that most cities that had fully deregulated taxi service have since reverted to some form of control over market entry.

We very much appreciate the assistance provided by you and other members of 1TF during this engagement.

Very truly yours, c:.c 2.

3.

1.

Executive Taxi Framework Why Taxi Regulation, A. APPENDICES: Research Effects

Post-Deregulation

B. Bibliography

Analysis Comparative Current

Regulation Deregulation

Cities

of

Methods

Deregulation

Summary

Deregulated

Deregulations

&

of

Historical

Taxicab

Price

Changes

and

&

Re-Regulation Deregulation

TABLE

Regulatory Supply

Section

and

in

Regulatory Re-Regulation

OF

Statistics

CONTENTS

Changes

and

Re-Regulation

Structure

in

Deregulated

in

US

Cities

Cities

page

17

4 3

6 1 6 1

8 Analysis

1

The

by

quality

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Berkeley,

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1984.

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above).

service

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name

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to 1 capability’to servethe telephone-basedmarket,most newservicewas concentratedat alreadywell-servedlocations- such asairportsand major cabstands. Customerwait timesat theselocations,alreadyshort, werereduced further. Responsetimesin the telephonemarketweresimilarto pre deregulationperformance. Trip refusalsand no-shows,however,increased significantly.

Pricesrosein everyinstance. Paradoxically,the influxof newentrants did not invokethe pricecompetitiontypicallyexperiencedin other newly-deregulated industries. Pricesrosean averageof 29°/bin the yearfollowingderegulation. There appearto be two sourcesof this unexpectedevent. First, fareincreases prior to deregulationhad consistentlylaggedcostincreases,Veteranoperators thus correctedpricesat the firstopportunity. Second,newentrants generally chargedhigherfaresthan the veteranoperators. The cabstandmarketson which theseoperatorsfocusedtheir servicesaregenerallypriceinsensitiveand, because of the first-infirst-outnature of taxi queues,comparisonshoppingis discouraged.For thesereasons,the newentrants had no incentiveto introduce pricecompetition.

Servicequality declined. Trip refusals,a declinein vehicleageand condition, and aggressivepassengersolicitationassociatedwith an over-supplyof taxisare characteristicof a worseningin servicequalityfollowingderegulation.

The negativeaspectsof deregulationwereespeciallyevidentat airportsand major tourist attractions. Asa result,deregulationoften acquiredthe enmityof the businesscommunityand adversemediacoverage.These effectsweremost closelyassociatedwith citiesthat implemented an “openentry” policythat enabledan influx of independentowner-operatorsthat were unaffihiatedwith companiesor taxicooperatives.

The short-termeffectsof deregulationwerelessadversein smallercitieswhichhavean insignificantcabstandmarket. The telephone-basedmarket,whichdominatesthe smallercities, is difficultfor independentoperatorsto serveeffectively.Thesecitiesthus avoidedthe structural changesto the industry that contributedto the problemsin largercitiesnoted above.

Post-DeregulationChanges in RegulatoryPractices

Allpost-deregulationchangesin regulatorypracticeswerelimited to citiesthat had implementeda ‘fullyderegulated”system,whereinboth marketentry and fares wereleft to the industry’sdiscretion Other citieswhich had onlypartiallyderegulated- for example,through the use of minimum2 standardsfor marketentry or by relaxinggovernmentinvolvementin fares - reported,no changesin regulatory structure. Nine of the thirteen citiesthat had deregulatedvia “openentry” choseto revert to a regulatedsystem,eitherin wholeor in part, by 1992. Sixcitiesreturned to a fully-regulated structure, in which the localgovernmentlimitsmarket entry and setsa fixedor maximumfare. Two other citiesimplementedregulationsfor airport-basedservice. These eight citieswerethe

2 see Section 1 of this report for a definition of the taxi regulatorystructure.

Analysisof TaxicabRegulation and Deregulation Final Report page ii largestof thosethat had initiallyderegulated,and had the most intensiveairport activity. One other city revertedto a minimum standardsapproach.

Only four of the 21 citiescontinueto employa fully-deregulatedsystem. These are among the smallestcitiesin the group. Relatedto the sizeof thesecitiesis the absenceof major structural changesin the industry that precipitatedre-regulationin the largercities.

Long-TermEffectsof Deregulation

Long-termpriceperformancein deregulatedcitiesissimilarto that of regulatedcities, basedon priceinformationsubmittedannuallyby membersof the InternationalTaxicaband LiveryAssociation(ITLA). Between1985 and 1992,the median3fare for a five-miletrip rose by 6.5% ($0.50) in deregulatedcitiesversus4.8% ($0.33)in a sampleof regulatedcities(see appendixB for details). Faresin citieswhich re-regulatedtheir taxiservicesroseby only 2% ($0.17) during this period,a reactionto the high rate of faregrowthfollowingderegulation. These resultsindicatethat deregulation,overthe long term, has contributed to neitherhigher nor lowerfaresthan experiencedby the industrygenerally.

Other long-termeffectsof deregulationare difficultto discern. Taxisupply (i.e.,taxis per 1,000 population)in deregulatedcitiesstabilizedafter the short-termincreasesnoted above, and appearsto be lowerand morevariablethan in regulatedor re-regulatedcities. Very little data is availableto support long-termevaluationof servicequality. These typesof data are rarelycollectedevenin regulatedcities,and areespeciallyscarcein deregulatedcities.

* * * * *

In retrospect,the effectsof taxi deregulationhaverangedfrom benignto adverse, dependingon localconditionsand markets. There appearsto be scantevidencethat deregulationfullyachievedthe goalson which its implementationwaspremised,though some goalsclearlywereachieved(e.g.,moretaxis,lessregulatoryinvolvementbygovernment). Market imperfectionspeculiarto the taxi industry,includingunusualproduct supply (e.g.,first- in, first-out queuesat cabstands)and poor availabilityof informationon priceand quality, tend to negatethe consumerbenefitstypicallyassociatedwith deregulationin other industries. It is perhapsnoteworthythat no majorUS citieshavederegulatedtaxi servicessincethe early 1980s.

3 In constant 1992 dollars.

Analysisof TaxicabRegulationand Deregulation Final Report page iii

Analysis

aspects

Between

Full

(open

restrictive

market

the

following

regulation of

both. government

Regulation,

and

each,

experienced

reasons

early

1.

service

left-most

regulation

provides

of 1980s,

entry). and

Deregulation

of

The

entry

Taxicab

This

A

remained

FRAMEWORK

Taxicab

these

taxi

a

supply

I

(regulator

wave

refers

to

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Franchise

Standards

Minimum

Necessity

Convenience

period

Open

Population

Ceiling

Predetermined

matrix

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control

unfavorable

section

involving

explain

column,

mechanisms

an

service

Fare-setting

two

and

Regulation

of

Entry

regulation

to

overview

(by

deregulated.

deregulation

System

of

extremes

a

Entry

below

full

Ratio

over

in

defines

of

tightening

the

&

limiting

that

relaxation

range

21

contrast,

deregulation

the

and

and

circumstances

results

taxi

illustrates

are

and

of

cities

mechanisms,

and

report

Re-Regulation

J

all

lie

from

Deregulation

the

services.

of

taxi

fare-setting

Regulator

fares)

hybrid

deregulation The

occurred

of

/

and

across

of

concern typically

methods

\

most introduces

All licenses),

government

//

controls.

the

opted

purpose

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refer

/

to

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the

approaches

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which

restrictive

shown

two

least

to

in

implies

to

used

U.S.

mechanisms.

to

local

or the

Fare-Setting

basic

opposite

refer

of

restrictive the

re-regulate,

led

prices

in control

to

taxicab

this

Since

interests.

terminology

ReuIetor an

7

to

MS

to

dimensions

the

compile

typically

(predetermined

by

report

absence

Inimem

opposite

these

(by

which

corners

top-most

that

over

industry

Mechanisms

(individual

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setting

while

or

different

the

_Define

is time,

implies

service

government

of

to

of

ends

of

used

record

government

the

row,

document

during

this

fixed

entry

most

the

Individual

ceiling)

of

supply

to

government

operators

remainder

outcomes.

7

matrix,

regulatory

range

on

a

describe

or

deregulated

mechanisms,

spectrum

Final

the

deregulation.

maximum

may

Operators

Fares

and/or

to

the

from

late

control.

a

Report

as

define

least

control

have

experience

taxi

shown,

Structure:

determination

1970s

most

of

prices,

cities

restrictive

regulation,

for

fares),

shown

fares).

page

Re-

some

and

various

.1

of

or in government

standards,

Analysis associated

regarding the Definitions Volume Definitions

quality 1

Definitions of The • • • •

•

Fare-setting • (Final Taxicab

taxicab

with

however,

and were

of

last

control, Report);

these service population Predetermined Franchise Convenience Population demand conditions. to typically existing Minimum necessity certain depending can Open one to are supply under capability,

Government-set must charge.

deregulation. stability drawn

two Regulation

supply. vary

operate

less

obtain

or

for

mechanisms

can

mechanisms

mechanisms October

are

be

open entry. from:

exceeds

more

by

minimum

with

restrictive

the

companies

The

and

by

protected

be in as of

raising

system.

relying

24 taxicabs.

on and

a

(e.g.,

standards.

types

Urban ratio. follows: entry, service. that A issuing

used

demand. of taxi 1983. the

rationale

and Under

hour

the

wide Deregulation

the

These

these

ceiling.

they 0.75

need

permit

to of

fares. the Mass

on

form than

standards.

requirements are

such necessity. -

The

ceiling,

from

to

service, This

a

minimum range influence

market

Its

open

market

factors:

fixed

cost

are

as cabs

increase mechanisms

is for Transportation

is

number

Cabs

as

the

effect

The and

follows: The

system

that unreasonable

the

unrelated

insurance of of

additional

entry,

per

this

number

or

second

entry

criteria provide market

forces

are

a

case city taxicab local

New

These

a

may the

the

1,000), standards

minimum

is

vehicle

for of

involves

allowed

almost

effectively

limits

mechanisms4,

type for

number

taxicabs

government

remove

range

permits

dimension

entry

to

to

Administration, of

or standards

fall

entry.

service service. service.

minimum

establish

demand. taxicab

rates.

of

The absence

age

the

into anyone

granting

and

to from

of

new

number

of

in the

limit.

may

ratio number

operate

new

is a

this

open

There

cabs. operation

closed

permits.

entrants

a

differ of

closed

regulatory

ofa

sets an

who

public

in standards.

be

The

companies

allows

category, the

specific Taxicab

These

of

equilibrium.

order entry

issued

the

criminal

as

are

of

from

entry’

vehicles,

owns

regulatory

standards

entry

long

utility, to taxicabs

fare

still the If is

regulations Regulation

- of

Final

body companies

the

set

under

demand

convenience

are

policy.

an

usually

to number

decreasing

as

that

and

requirements

record,

as

market,

operable radio

most

open

and Report

they

may from in

a

matrix.

Minimum

operators the

certain in

function

operation,

relevant

the

for

satisfr

closely dispatch

limit

entry, of US

but

ability

include

the

decisions

and

public

permits

taxicab

page vehicle Cities:

and

these

right

thus

may

of

to 2

of Minimum and/or maximum fares. The localgovernmentsets a fare ceiling or a floor, and taxicaboperatorsmay chargeany fare in the allowablerange. The minimum or maximumfare may be set preciselyby the regulator,or defined as a functionof the averageor median fare acrossall operators. It thus allowssome amount of price competition.

Industry-set fares. Faresare left up to the discretionof each operator. Often, operators must still file their rates,and the governmentmay limit the number of rate changesper year.

Of these, industry-set faresare most closelyassociatedwith deregulation. This removesthe regulator from makingdecisionsnot only about fares,but alsoother factorsthat influencethe specificationof an acceptablefare,such as productivity-and profitability.

ResearchMethods

The information presentedin this report was compiledvia the followingmethods:

• Literature review All referencesin this report to the short-term impactsof deregulationwere drawn from previousstudies of taxicabderegulation. Most of these studieswerepublished between 1982 and 1984, and were sponsored by USDOT/UMTA’s Serviceand Management Demonstration (SMD) Program. Other sourceswere used aswell. A bibliographyfollowsthe appendicesat the end of this report.

• Telephone surveys:Phone interviewswereconducted with regulatorsor other city administrativestaffin the 21 citiesthat pursued some form of deregulation. The primarypurposeof these interviewswas to verifythe current regulatorystructure, and factorscontributing to regulatorychange. A limitation of this method is that the deregulationsoccurred nearlyten years ago, generallyexceedingthe institutional memory and file retention of city regulatoryagencies. A summaryof current and historical regulatorychanges for these citiesis providedin AppendixA.

• International Taxicab & LiveryAssociation (ITLA) statistics: Statisticson price and supply for the years 1985 and 1992 were abstractedfrom the Taxicab Fact Book,as reported by ITLA members. These post-deregulation statisticswere used to determine the longer-termimpacts on price and supply, and to compare the experienceof regulatedand deregulated cities. Price Waterhouse did not independentlyverifythis information. A table of price and supply statisticsreferencedin this report is presented in AppendixB.

• Case studies: On-site interviewswere conducted in San Diego, Seattle,and Phoenix to collectadditional information on the transition to and from deregulation.

Information on servicequalityalsowas sought but found to be generallyunavailable. Consequently, only the short-term impacts on servicequality, from the USDOT/UMTA studies, are referencedherein.

AnalysisofTadeabRegulationand Deregulation FinalRepoit page 3 2. TAXI REGULATION

Regulationsgoverningthe taxicabindustiy havebeen in placesince the beginning of taxicabservice. The most activeperiod for new taxicabregulationin the US occurred during the late 1920sand early 1930s,when the Depressioncausedextremelycompetitive conditions, and growingurban centersinvariablyexperiencedproblemswith taxicabservice. A Washington Post articlefrom 1933, entitled “TaxicabChaos,’ effectivelyconveysthe initial desire for taxicabregulations:

TaxicabsareliterallyrunningwildonWashington streets,withalmostcompletelackof supervisionorcontrol.Publicsafety,reasonableworkingregulations,andequitableratesare almostcompletelydisregarded...Hundredsofinexperienceddriversrentcabsand offertheir servicesto the public.OnedriverwhowasrecentlyobservedproceedingdownPennsylvania Avenuelikeaderelictconfessedthathehadnotdrivenacarforsevenoreightycars

A central feature of taxicabserviceis the potentiallylow cost of market entry. A serviceablevehicleand a licenseddriver are the minimum requirements to start a taxicab operation. In an unregulatedenvironment, the low cost of entry attracts individualswho have limited employment options. Thus, during periods of high unemployment, independent taxi operators flood the market. Conditions such as these during the Depression led cities to regulate taxi services. Once this practice was established,it tended to spread to other cities as a precedent for protecting the public interest.

Accordingly, restriction of market entry is the central feature of the taxi regulatory structure. Three arguments arc traditionally cited by the taxi industry in favor of regulating market :5entry • “natural monopoly” - one firm can provide servicesat least cost

• “destructivecompetition” - too many competitors yield insufficient profits and cause declinesin safety and service.

• “crosssubsidy” - profits in lucrativemarkets are needed to subsidizeservicein unprofitable markets.

A 1983 study estimated that 80% of cities limited market entry, and 77% regulated fares. The full distribution of regulatorypracticesis shown in the graph on the following page.

Most taxi regulations are effected by local jurisdictions (i.e., cities and counties). Only three states completely regulate taxis, and seven others exert partial control. The remaining states generallyspecify only minimum standards for safety, leaving fare and entry regulation to local governments.

5 FromTeal,et al, Urban TransportationRegulationin Arizona, USDOT/UMTA, 1984.

Analysisof Taricab RegulationandDeregulatwn Final Report page 4

An4ysL

Source:

of

Shaw,

Taxicab

Maximum!Mini

mum

Standards

Gilbert,

Minimum

Regulation

Industry-Set

20%

27%

Fares

Fares

23%

Population

et

Ratio

10%

al,

and

Taxicab

Fare-Setting

Deregulation

Market

Reguiatiorc

Franchise

System

Entry

Convenience

7%

Necessity

Mechanisms

29%

Mechanisms

in

US

&

C’ities,

USDOT/UMTA,

Government-

Pre-set

set

50%

Final

34%

Fare

Ceiling

Report

1983.

page 5

An4ysis

benefits

attractive

the

presented

locations

cities

market

these

services

respectively.

Why

effects

cities

smaller

implemented

another

deregulated

degrees.

3.

driving

Cities

deregulated

cities

of

continue

of

and In

entry:

Twenty-one

This

by

in Through

Taxicab

TAXI

While

and

two

and

on

In

deregulation,

telephone

Deregulated

population

1983.

force

moved

forced

structure

the

section

unanticipated

cities

The

the

dates

Administrative

would

(1)

other

that

availability

quality

competitiveness

Quality for

cabs Level

expected

The

incumbent deregulation

charge

Price.

DEREGULATION

some

Regulation

to

past

behind

following

open

fares,

1983,

telephone

remaining

Two

employ

costs

a

regulated

from

should

positive

of

measures

US

of

and

of

reconsideration

of

reduce

ten

higher

as

Presuming

than

tended

these

of

entry

service.

the

cities

but

and

the

these

would

twenty-one

cities,

well

deregulation,

and

traditional

on-site

years,

of

service.

operators

reduce

a

page.

the

report

results

license

number

maintained

expected

deregulations,

changes

new

Deregulation

government

orders.

taxi

fares

fully-deregulated

nineteen

as (13

-

benefits

that

to

costs.

Atlanta

principally

of

other

also

six

price,

As

have

surveys

services

pricing

cities);

that

the

than

the

describes

occurred

raised

values

Proponents

of

entry

be

regulatory

of US

enjoyed

AND

in

of

cities;

new

industry

Proponents

one

resulting

wait these

were

entry

cities

which

saved

and

cabs

would

the

controls

full-scale

cities

of and

and

the

at

costs

restrictions

in

entrants

in

of

and

RE-REGULATION

times

Indianapolis

these

(2)

regulatory

realized airports.

cities

why

deregulated

in

as

restrictions

regulated

some

western

by

hurdles

(2)

the

service

held

opted

prevail

should system

well.

structures

service

by

less

of

the

in

eliminating

over

minimum

these

following

cities,

for

deregulation.

reverted

of

deregulation

eliminating improved

the

monopoly

to

reliant

changes

through

to

options.

deregulation

street-hailed

In

for

and

The

are

force market

in

cause to

today.

cities following

structure

twenty-one

deregulate

a

most

had between

-

a

market

increase.

lifted,

free-market to

Sunbelt

deregulated

on

cities

competitive

to

characteristics:

a

standards

in

were

operators

one

rate service

enabled

deregulation,

reduction

a

entry.

airport

cities,

power.

permit regulatory

fully-regulated

expected

deregulation

which

following

entry.

expectations:

of

change

1979

cited

service

taxi

states,

expected

cities

In

two

quality

these

Graphics

activity;

incumbent

(5

ideology

theory,

processing

in

to

services

market,

maintained

as

and

in

Only

Final

forms

deregulated,

cities).

review.

that

1965

deregulated

compete

and structure,

evidence

outweighed

deregulation.

the

(1)

other

and

1983.

that

Report

proponents

or

four

these

the

response

prevailing

system,

relatively

showing

to

of and

was

proponents

the

(3)

Three

open

operators

less

efforts,

various

deregulated

new

based

a

of

Most

that

cited

1973,

additional

are

had

page

taxi

the the

the entry

and

times other

the

the

on

of

rates.

and

as

21

6

to of Summary of Taxi Deregulation in the US

[Location &Timingof Deregulations I

Seattle (1979) Madison (1979) Spokane (1980) Milwaukee (1979) Tacoma (1981) Des Plalnes, IL (1981) Portland (1979) IndianapolIs (1973) Sacramento (1982) Springfield, OH (1981) Oakland (1979) Kansas CIty (1983) Berkeley (1980) • en Ent Charlotte (1982) Fresno (1979) Atlanta (1965) San Diego (1979) + MinimumStandards Jacksonville (1983) Phoenix (1982) Tampa (N/A) Tucson (1982) l FaresOnly(restrictedentry)

[Ta:1.Regilatoystructure:.Pre- and Post.oereguiationj

Pre-DereguIaton Post-Deregulation

Open Entry OpenEntry Minimum Standards Z 2- Minimum Standards Franchise System 1 — anchise System 1 — Convenience & necessity & necessity 7population ratio O-j .1’opuIstIon ratio ‘ ‘ Predetermined Ceiling . - Predetermined Ceiling

note: 3 of the 21 citIes are omitted from these graphs due to missing information on the pre-deregulatlon regulatory structure

Analysisof TaxicabRegulationand Deregidation FinalReport page 7 partially population, experienced Effects following tended the

Analyth

6 7

Teal,

In

rest

constant

et

of

A The to

which Price

drarnatic similar of deregulation increases substantially independent companies. high San ($1.39) Phoenix, comparison cities, that and of competition

versus similar services of 9). growth

the

re-regulated al,

Deregulation

summary

this

Taxicab have

short-term

the

Urban

long 1992 a

The effects Diego,

the no

these

of

high

section).

independent in

industry 4.8%

to

Despite

In

a

to

56% In

dramatic

in

during

rose airports.

dollars.

median

other

roughly Transportation term,

Regulation negative

but

the

the operators those

In the

the

level

of

these

of

shopping

This

on

in

by higher and ($0.33)

($2.40)

price the taxi

industry and

deregulation

first

long-term

six

the

industries

has

every their

a

over

only

the

Cities of

in

fare7 effects

large

long-run,

operators small-fleer reflect can

These

services cities

experience

long-term

effects

and

year

airport

re-regulated

had information

and

part

fares

spent

the

deregulated

in 2% in

documented

be

by

Deregulation

which Deregulation

for as

increase

little documented

following

Seattle

regulated

small-fleet -

changes

are

long-term. of

seen

(i.e., prospective a

has -

($0.17)

of either

(see

a activity, long

whole. varied than

new were

however,

generally

five-mile

operators

deregulation

changes

impact

with

did fostered

in

1985-1992),

“Post-Deregulation

to in

wait

cities

by

entrants. positive

the those

observed in

period.

not

during in

cities.

a service

deregulation, by

deregulation.

case.

and company Please

operators

industry low Arizona,

graphs

times on

in

location.

customers.

in

possess

price-insensitive trip and

prices

price

charged

(see

conditions

the

of

fare

price.

or

The

Fares

this

supply

is These refer

rose

regulated

to

7%

in

“Level

USDOT,

on

negative

USDOT competition,

price

presented

in

growth structure,

size

the charge focused period,

short-term the

page

by ($0.40) in by

deregulated to

Cities

the

(see

results As

above was

This

taxi

trends

cities

the

6.5% of

the

conducive

Changes

average

1984,

a 10.

cities

relative -

higher

Service”,

‘Level

a case

not their graphs which

queues,

result,

and larger,

below. condition, markets

particularly

in reaction

which

characteristics,

indicate

($0.50)

A in

changes

page prices

documented. Oakland.

studies.

(see

have

similar

service

deregulated

cities

fares

of 5-mile

in

to

had

these

on

more-established

to

54.

discouraged

re-regulated

below).

bottom Service’

with

the

Regulatorj

rose

performed

to

low-cost page

in

that -

a

have

in

along

Final

effect

cities on sometimes

the

This

relatively

an

fare rest

deregulated

price

little

The following

deregulation,

9

major

increase

high

performed

Report conversely, graph

of In on

cities rose

for with

ranged

either was In

price

market

or

were

the

Seattle

price

page

Structure1’,

their

much

a

all

rare

by

no

large cabstands

noted6

summary the

on

are

industry.

three taxi

in

fully

quice

page

29%

cities

from

of

11),

taxi

page

fact

entry

like

and

fare

over

8©

or

in

a

Analysis

2

C.)

w

C

Source:

Source:

$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

of drawn

‘

a

a

Taxicab

USDOTcase

$4.00

$4.50

$5.00 $5.50

$6.00

$6.50

$7.00

$7.50

$8.00

$8.50

from

Seattle

ITM

Regulation

/

I

studies

Taxicab

Taxi

teregulated

on

Cities

Phoenix

the

Fact

and

I

Median

efficts

Prices:

Change

Book

Deregulation

of

statistics

taxi

Fare

regulatory

in

Portland

Short-Term

(see

5-Mfle

for

Net

Appendie

a

Change

revision.

5-Mite

Re-regulated

Fare,

San

B)

Cities

1983-1984.

TrIp,

One

Diego

and

—X——

Year

1985

Long-Term

After

Average

vs.

Percent

1992

Derequlaii Change

S

I

Regulated

Berkeley

Trends

Cities

Final

Report

Oakland

F

E

p.

page

• EJ

-

•

•

0.0%

10.0% 20.0%

30.0%

40.0%

9

50.0% 60.0%

1992

1985 a- .

C,

a

a a a $10.00

Analysis soiave: ConasmerAffairs, eeported $7.00 $9.00 $5.00 $8.00 $4.00 $6.00 $3.00 $2.00 $1.00 $0.00 compiled by Soisrce: $6.00 San $5.00 $7.00 $4.00 $3.00 $0.00 $2.00 $1.00 the of Diego,

Taxicab City by USDQ7’ Jesse

I.’. I I ISIS Pricc of 1983. Seattle 1980. Wattrhourc

Regulation Effects

Fares Departmen; 1

of

I from Rrgulaemy

San

Seattle,

S

for

and of con

Diego, Licenses

a cab

Deregulation

5-Mile Revleion 2 rate

one to send 3

one

year in

S

S

S

Trip,

year

after

after

by 4

dèréguiàtlon to

Company Company 32

deregulatippj

S S

S Company — size More

I (# - -J More

Size than of Size cabs) than 32 (# -1 of 20 cabs)

Final ______

D J

S

Report Maximum Average Mnmum Fare Fare Fare

page

10

Analysis

8

USDOT,

of

deregulation

“Post-Deregulation reflects

relative and

currently-deregulated

sparse.

inconsistencies

long-term

operators.

refusals

serviced

minutes). only

dramatically

case

cabstand

Response

increase

Berkeley

Berkeley In

attributable

operators

Phoenix,

San

fleet considerably

a

operators

effects

deregulated

in number

locations,

Taxicab

Level

Effects

high

Oakland,

customer

regulated

studies,

Diego

data

owners

a

of

of

to

Long-term

Although

of

of

Customer-oriented

and

Regulation

As

calls

in

Deregulation

continuing

Regulato?y

experienced

market, there of

Service

San

set

population

times

70%

comparisons

focused

taxi

The

immediately

This

this

supply

noted

no-shows and taxis.

to (note:

-

though

cities.

on

grew

service.

were

containing

among

(see

from

Diego,

supply

between

was

small

large

rate

(Phoenix)

was for

the

Seattle,

and

in

taxi

as

Revision

graph

were

while

their

about

data

Because

for

little

Regulatory

2% the

of

Data

other

correction

found

the

the

noted

increase

operators

these

DereguLation

cities

and

In

in

little

on

supply

produced

are

no-shows

a

to

for telephone-based observed

after

service

of

taxi

graph

on

available

re-regulated

description change.

the

the

the

before-and-after

the

in

service

are

to

Seattle

most

hand,

trends

all

cities

earlier,

change

to

San evaluating

service

has

new

page

supply

long

percentage

percentage

a

same deregulation

in

data

insufficient)

calls

be

low

(top)

Diego,

serving

on

to

Changes”,

stabilized.

closely supply

entrants

in

and new

(see

improvements.

true

to

within

14).

experienced

term,

In

data

the

was

the

to

after

reduced

improvements

of

in

most

data

be

on

of

contrast

1983,

trip

bottom

and

large

18.2%.

in

fares.

10%

rapid

taxi

airports

It

suggests

a

marginal.

made

related

changes

did

the

the

deregulation

of

of

both

market

and

price-insensitive

classes

cases

is

tended

cancellations,

regulated

data

however,

Table

increased

supply

below). large

fleet

cabs

Meanwhile,

apparent

(Berkeley).

level

not

already-short

following

growth

population

available

graph

to

San

large

As

an

and

to

(for

that

B-9.

produce

owners

of

in

operated

were

the

fleet

of

to

shown

immediate,

small

Focus

expected

and

Diego

cities

regulatory

service

major

San

fare

congregate

cities. on

in

to

other

little

by

that

operators

(13.6

not

page,

by

taxi

service

comment

following

The

entered

however,

23%

fleets

taxi

Diego) 8 increases

of

corresponding

- in

tend

and

market

growth wait

by

change

the

consistently

cabstands.

cities

deregulated,

appears

In

supply new

minutes)

the

to

the

supply

type

independents

on

Seattle.

ITLA,

structure and

large

re-regulated

improvements

to

occur

times

at

graph

declined.

Final

number

the

above,

entrants

average,

response

on

limit

occurred. (see

increased of

page).

in

that

already

independent

that

to

increase

market,

has

new

taxi

the

Report

geographic

with

to

as

have

Consequently,

on

‘Price”,

were

evaluated

the

Oakland

occurred

re-regulated

by improvements

almost

declined before

of

supply long-term

on

entrants

In

page

ranging well-served

These

the

times

validity

stabilized

city, cities,

and

taxi

in

in

while

Phoenix,

the

In

page

are

large

above).

part

13,

the

(13.4

zero.

the

small-

in

see

for

and

with

in

this

ii

varied

from

in

trip

of

the

all in ______

Changes in Taxi Supply & Industry Structure Following Deregulation

1Short-Term Change In Taxi Suppty Following Deregulation 1.2

0 0.8 0. 00 0.6 C

0 Seattle Oakland Berkeley Average Portland Phoenix San Diego

I 8efore After %-Change

Soue: USDOF/UMTA case studies on the effectsof taágu1acorytevlsion, 1983-1984

Net Change in Percentage Distribution of Taxis by Company Siz

30%

20% 10% — — no, FrIzi -10%

-20%

-30%

-40%

-60%

Berkeley Oakland Phoenix San Diego Seattle

1 cab C 2to3cabs R4to3Ocabs 0 Morathan3Oczbs [

Soue USDQ7UMPI. casestudieson the effccs of tagidaro, levision, 1983-1984

Analysisof TaxicabRegukuionand Deregu!arwn Final Report page 12

Analysis

C’)

a

0.

U) a

0

0

a

10%

20%

16%

25%

30%

35% 10%

20%

30%

40%

50%

60%

0%

5%

0% of

•

Taxicab

Associations

Independent

Mini

Response

(1-3)

Regulation

Fleets

and

to

independent

Deregulation

Small

Telephone-Based

Fleets

rsan

After

Fleets

[Seattle

Diego

Deregulation

I

Large Companies

Service

Company

Large

Service

Service

0.0 5.0

10.0

•

15.0

20.0

• 25.0 Requests

•

0

:

2

8

10

12 14

.

a

a U)

E

z a

a

a

Soww

Rda,o,

Rqktoy Sw ______

———

—

Final

ucDonEffiarcf

USDO7Effirx

sthn

Report

Trip Thp

Response

esponse

in

Refusal

Refusal

in

.Sm

Seaztk.

of

lime

lime

page

kg

Rate

R]

1983

13 1983 Taxis per 1,000 Population (median values)

1.10 A 1.00 1 0.90 0.80

0.70

0.60 D 1985

0.50 1992 0.40 -4-

0.30 0.20

0.10 0.00 I Deregulated Re-regulated Regulated Cities Citiec Cities Note: geographic inconsistencies between taxi supply and population data skew the cabs per 1,000 figtirc and thus comparisons across cateaores may not be accurate. The 1985-92 trends, however.shouId he valid.

Source:ITLA Taxica6FactBookand (IS Census,SeeAppendixBfor details.

Analysisof Taxicab Regulationanti Deregulation FinalReport page 14 Analysis 10 USDQT/UMTA, USDOTIUMTA,

of

processing

administrative Administrative

Diego, structure

vehicle variables,

There

improve

major

market

to

following prior

median

that

years

vehicle

following

the

entrants

service

taxi marginal

in included

consistent,

referenced

responsiveness

behavior.

Service

Taxicab

result

response

taxi

a

operators

to old

large

cabstands

is

open

The

inspection

Changes

Information

conditions

refusals

age

The

As

The

vehicle licenses

Regulation

deregulation 9 .

Quality

no

relations in -

Effects

and

including:

on

a

Effects improvements

deregulation,

deregulation

generally

and

The

noted

slight

in

and

aggressive

data

influx

USDOT

evidence,

times

effect

entry

quality

average,

cost

the

costs

deemed

of

related

Costs

of

and to

age

inspection case

prior

on

in

and

Taxi improvement

Taxi above

and

between

procedures;

case

customers;

of

recovery to

was

of

allow

administrative

increased

the

either

no-shows.

independents

on

(1)

of

studies

telephone-based new

Regulatory

airports,

deregulation versus Deregulation

Regulatory

case

solicitation

hearsay

to

activities 10 .

studies,

reported

to

from

taxi

first

changes

the

all

Further,

in

in

a

deregulation

entrants

be

did

studies

greater

results.

drivers

“Level

fleets

policy

customer

service

volume

of

2.9 two

high

20%

(2)

to or

Reoisin

however,

not (3)

Revision

but

the

On

in

in

years

to

6

of

otherwise,

operated

vehicle

vehicle

of

of

the return and

on

priority

of

costs

waiting

and

on

years

change the

causes

effects

is

driver

increase

is

This In

these

balance,

of

passengers

Service”,

the

affected responsiveness,

in

less

the

service

vehicle

in

frequency

for

(see

San

year

small

new customers.

Seattle,

as

over-supply

San

old

was

condition

inspection

local

variables.

on

effects

behavior all

rigorously

the

of

with

or

graph

a

times

Diego,

(as

prior

market

Diego,

the

indicating

result it

investment.

following fleet

operators

deregulation

requests,

influenced

increased

large

condition

by evidenced

1983,

jurisdiction.

the

can

yet

and

time

of

of

at

several

on

to owners

1983,

vehicles

short-term

of

be

following

and

service

entrants;

cabstartds,

older

rate deregulation

p.

Information

failures

deregulation.

confrontations

following

measured.

of

and

but

deregulation

98. said

and

to

deregulation that

pp.

following

taxis

cleanliness;

changes;

can variables,

primarily

from

vehicles. only

-

defer

dollar

provide that

200-204.

company

owned

a

were

deregulation increased

be

significant

was

(2)

deregulation

effects

an

for

page).

the

investment deregulation assessed

Final

cost

license observed

on

indicate

consistently

and

insignificant

deregulation.

by

those

including:

limited,

by

trip

depend

Both

In

and

among

driver

from

that of

Report

of

new

the

to

(4)

Two

Seattle,

refusal

deregulation

increase

application

permit

by

(3)

customers

35%

cases

acted

held

the

volume

that

4

to market

is

behavior

but

on until

changes

drivers.

years

driver

years

provided

scant.

be

(I)

fee

page

reported

two

suggest

rate).

most

several the

change

to

7.1

in

In

of old

15

years

that

San

At

and

in

is of Comparison of Fleet Age by Size of Taxi Company - San Diego (one year after deregulation)

1 00.0% .90.0% •80.0% 70.0/s0 60.0% .50.0% 40.0% 30.0% -20.0% noi over 30 cabs .ln . 0 4 to 30 cabs 2to3cabs 0.0% 1 cab

>. >‘ >. > C, 1% A r-

how to read this chart: source: each bar shows the percentage of a fleet USDQT/UMTA,Effects of TaxiRegulatoiy Revision that is equal to or less than the age in San Diego, 1983, p. B-li. displayed on the horizontal axis.

[continued from previouspage]

new permit requestssubmitted by market entrants. In Seattle,staff costswere reported to increasedue to the largernumber of taxisto be inspected. Inspection effortswere exacerbatedby the provisionfor quarterly fare changes,which necessitateda correspondingincreasein meter 11validations Oakland and Berkeley, in contrast, experiencedimmaterialchangesin 12costs As noted earlier,open entry in these citiesdid not result in a largeinflux of new. operators. In the cities for which objectiveand consistent data are availableregardingthe effects of deregulation, the fully-deregulatedmodel (i.e., open entry and industry-setfares)appears to have yielded few desiredchangesin taxi service. An increasein the number of taxiswas the most clearly-attainedobjective. Other unanticipated and unattractive resultsthat were associatedwith the large influx of new operatorsencouragedmost open entry citiesto reconsider taxi deregulation. These post-deregulationchangesin regulatorystructure are described in the followingsection.

11 USDOT/UMTA, EffectsofTaxiRegulatoryRevisionin Seattle, 983, p. 146. 12USDOTItJMTA, TaxiRegul#toryRevisionin Oaklandd Berkeley,Calflirnia: TwoCa.ceStudies,1983, p. 54.

Analysisof Taxicab Regulationand Deregulation Final Report page 16

Analysis

some guests.

taxi

from

major

other Atlanta,

which

Oakland

Of

cities

today. convenience

services;

while

deregulated

cities

split

regulation, since

intensive

(top),

Post-Deregulation

the

among

between

airports.

deregulated

taxi

retained

is

retaining

hotels

reverted

deregulation

of

this

thirteen

Thus,

The

Sacramento

Phoenix

Seattle

San

as

Atlanta

Oakland Milwaukee

Indianapolis

Indianapolis,

in

(2) Taxicab

-

services.

Two

The

airport

follows:

re-regulated

response

wave

competing Diego

presented

fares

two

current

enter

&

the

the

the

the

cities

to

open

an

necessity);

cities

Regulation

Ciz-y

cities

of

only,

cities

activity.

some

fully-regulated

most

formal

into

Changes

fully-deregulated

open

(1)

In

(i.e.,

re-regulation

regulatory

to

that

entry

that

San

in

these

six

that

services.

exclusive

and

to

the

for

visible

form

entry

open

the

have

and

and

cities

protect

had

Diego,

(4)

cities

Particularly

other

problems

were

in

have

cities,

table

of

Deregulation

Regulatory

informal

approach

six

entry)

originally

source

fully

structure

that

regulation. Date

-

previously

contracts

continued DereuLztion

reasons. was

arid

cities

and

consumers

Phoenix

below.

private-sector

“re-regulated”

approach,

were

of

noted

had

led

of

fully

Seattle.

1982

1979

1982

1979

initial

1979

1979

1973

notable

1965

retained

regulation

for

Structure

problems,

opted

for

by

attracted

previously

with

deregulated

and

non-airport

open

above,

this

As

the

the

who

combining

Two

was shown

for

ed

Sacramento

taxi

practice

a

original largest

“franchise

entry

Airport

Airport

maximum_fares

Pie-determined

maximum_fares

Pre-determined

Pre-determined

regulated_fares

Pre-determined

minimum regulated_fares

Pre-decerrnined

Pre-determined

are

of

taxi

most

egulated

open

Te

but

a

a

companies

other

open

major large

shift

unlikely

in

services

have

retained cities

models.

services;

of

entry,

franchise

permits

while 21

the

fares

open entry

fares

from

large

number

the

systems”

-Rqulat-ian

stand deregulated

-

regulated

standards

graph

of

chose

or

retaining

cities

only

tend

to

ceiling,

ceiling,

ceiling, ceiling,

ceiling,

ceiling,

the

open

cities

entry

have

the

(3)

The

unable

markets

provide

of

on

group

to

three

open

four

to

also

that

re-regulated

entry

- current

independent with

airport-based

the

regulate

approach;

Milwaukee be Final

-

cities

entry

continue

to have

deregulated

cities

entry

that

larger

service

following

was

industry-set

to

shop

Report

Date

Regu&ation

unknown

Status

shows

some

evolved

controls

effected

had

had

taxi

system

cities

1984

1983 of

1982

1988

1992

1974

1981

for

and

to

all

this

Re

and

operators

the

service

services,

of

Form

page

their

a

page

the

taxi

have

(5)

in

wherein

cleat

practice

these

for

(e.g.,

most

in

fares.

best

17

four

of

all re - Analysis w 0 0 0 4-’ ci U, z E U C Vi) U) C U C a a E 0 D QøSt in 20,000- L.1,WW 15,000- .r 5,000 Current iiiiii— nflri

of ,. the 0 Taxicab

: -.. - 0 21 Regulatory Deregulated — Regulation 200

: i_ / 400 Population Structure Predetermined and . Cities Population Deregula Convenience 600 Franchise in Ceiling ratio ,,fmum jion Open (000s) 800 & System Entry necessity Standards 1,000 0 z I C z E q_ 1,200 Changes Compared

o • + Final in to Regulatory Airport Re-Regulated Minimum Deregulated Initial Report Predetermined Population - Deregulation Regulated Convenience page Standards Franchise Structure Minimum Ceiling ratio 18 Open & System Entry necessity Standards

Analyth

deregulation

price

supply

government). some

deregulation depending

Springfield,

of

Berkeley,

company.

discouraging

dispatch

Portland, significant

(5) a

approach).

Des

entry

and

mid-point

the

Tucson,

to

Plaines,

and

goals

of

restrictions,

cities

(e.g.,

In

The

our

The

The

Taxicab

capability)

quality,

California;

Oregon;

retrospect,

on

clearly

issues

knowledge

Illinois.

that

four

first-in, Arizona;

in

cities

fully

cities

between

Illinois

independent

local

Market

other

Regulation

had

cities

and

tend

achieved

which

were

however.

which

(2)

conditions

exercised

first-out

(convenience

(2)

industries.

the initially

and

accordingly

lull

imperfections

Fresno,

to

which

have

achieved

Spokane,

and employed

effects

had

negate

deregulation

(6)

owner-operators

the

made

The

Deregulation

queues

Jacksonville,

implemented limited

in

have

and California;

*

goals

of

these

the

(e.g.,

cities

have

no

Washington;

&

markets.

taxi

retained

a

peculiar

on

improvement

at

minimum

necessity

deregulation

ensuing cities

*

more

and

include:

maintained

deregulation

cabstands)

which

(3)

Florida.

that

Full

full

a

act

taxis,

There

to

Madison,

fully-deregulated regulatory

*

approach);

its

regulation

deregulation.

(1)

to

standards

the

(3)

are

implementation

raise

less to

and

in

this Tampa

appears

Tacoma, The

not

taxi

have

fares price

*

regulatory

consumers’

structure.

the

Wisconsin;

affiliated

industry,

minimum

changes.

ranged

and

approach

of

only

(population

and

cost

to

taxi Washington;

*

These

(3)

be

system

reported

performance

of

with

services,

from

scant

involvement

including

Charlotte

These

Each

was

market

lack

standards

(4)

to

cities

a market

are

Final

premised,

benign

ratio

evidence Kansas

of

of

taxi

cities

no

likewise

among

knowledge

include:

entry,

and

these

Report

significant

unusual

(franchise

approach);

cooperative

associated

(e.g,.

entry,

include:

by

to

City-,

(4)

cities

that

thus

though

adverse,

the

reported

(1)

24-hour

page

Missouri;

product which

of

smallest

has

system

issues

(1)

with

(2)

.19

taxi

or

is no APPENDICES

A: Current & Historical Regulatory Changes in Deregulated Cities

B: Comparative Price and Supply Statistics

Bibliography APPENDIXA:

Current & Historical Regulatory Changes in Deregulated Cities MAJOR CHANGES IN TAXICAB REGULATION

Code’ I City Type lmttal Regulation Date New Regulation v Current Regulation Supply

.. .. .: . .: .

Anchorage, AK (*) entry population ratio (1:1500) 1982 cony & necess/ceilmg (158) same 158

.______fares government-set 1983 maximum fare same $9.50

0 Atlanta, GA ezltry predetermined ceiling 1965 open entry fares

R > > re-regulation entry open entry 1981 predetermined ceiling same 1,582 fares government-set same $7.30

0 Berkeley, CA entry predetermined ceiling 1980 open entry same N/A fares government-set industry-set same $11.80

Charlotte, NC entry convenience and necessity 1982 franchise/cony & necess same N/A fares government-set industry-set same N/A

Des Plaines, IL entry convenience & necessity same 31 fares government-set 1981 industry-set same $7.00

El Paso, TX entry franchise system 1981 convenience and necessity cony & necess/ceil (250) 275 fares government-set 1987 government-set (raised) same $8.70

0 Fresno entry N/A 1979 open entry fares N/A industry-set

R > >re-regnlation entry open entry 1982 minimum standards same N/A fares industry-set maximum fares same N/A

0 Indianapolis, IN entry population ratio 1973 open entry fares

R > > re-regulation entry open entry 1974 predetermined ceiling (600) cony & necess 392 fares_— government-set $8.15

M Jacksonville, FL entry convenience and necessity 1983 minimum standards same 400 fares government-set maximum fares same $7.25

M Kansas City, MO entry predetermined ceil (532) 1984 minimum stds same 458

fares government-set 1983 industry-set 1986 - max fares (wtd avg) $8.41 MAJOR CHANGES IN TAXICAB REGULATION

Cod&. City Type Initial Regulation Date New Regulation Current Regulation J -Supply i -Prices

M Madison, WI entry population ratio 1979 mm. standards I franchise same 150 fares government-set 1982 industry-set same $8.40 0 Milwaukee, WI entry population ratio 1979 open entry fares

R > > re-regulation entry open entry 1992 predetermined ceiling (324) same 324 fares government-set $7.50 Norfolk, VA entry predetermined ceiling 1982 convenience and necessity fares

> > re-regulation ent:ry convenience and necessity 1985 predetermined ceiling (234) same 234 fares government-set $6.85 0 Oakland, CA entry convenience and necessity 1979 open entry fares

R > > re-regulation entry open entry (600) 1988 predetermined ceiling (318) same 318 fares government-set $11.80

Orlando, FL entry predetermined ceiling (127) 1981 predetermined ceiling (220) 1988 - pop ratio / formula 272 fares (272) $8.05 government-set

0 Phoenix, AZ entry state-regulated entry 1982 open entry same fares government-set N/A NIA

M Portland, OR entry population ratio 1979 mm. standards / ceiling same N/A fares maximum fares same $8.00 0 Sacramento, CA entry population ratio (123) 1982 open entry same 197 fares N/A MAJOR CHANGES IN TAXICAB REGULATION

. . . . Cq City Type Initial Regulation Date New Regulation Current Regulation -Supply

. .. Pnce.. .

0 San Diego, CA entry cony & necess I pop ratio 1979 open entry fares govermnent-set maximum fares

R > > re-regulation entry open entry 1982 closed entry (permit freeze) N/A N/A fares N/A N/A

0 Seattle, WA entry population ratio 1979 open entry fares government-set industry-set

R > >re-regulation entry open entry 1984 predetermined ceiling same N/A fares N/A N/A

0 Spokane, WA entry population ratio 1980 open entry same N/A fares government-set industry-set same N/A

0 Springfield, OH entry N/A open entry same 10 fares government-set 1981 industry-set same $8.00

0 Tacoma, WA entry population ratio 1981 open entry same 79 fares government-set industry-set same N/A

Tampa, FL entry population ratio (1:1000) N/A population ratio (1:2000) same N/A fares government-set maximum fares same N/A

M Tucson, AZ entry state-regulated 1982 minimum standards same N/A fares government-set industry-set same N/A

1. Codes: 0 = an open entry city; R = re-regulation of an open entry city; M = a minimum standards city.

2. Current number of cabs and five-mile fare. From telephone interviews with city officials. September 1993. APPENDIX B:

Comparative Price and Supply Statistics COMPARISON OF TAXI PRICE AND SUPPLY IN DEREGULATED, REREGLJLATED, AND REGULATED CITiES

$10.79 $ .10 0.15 401 63 Kansas City $6.20 $7.27 $7.50 1.19 1.30 444 431 530 560 Madison $5.83 $6.83 $8.40 0.42 0.52 168 204 70 107 Phoenix $6.70 $7.86 $7.22 0.39 0.49 833 1043 325 506 Portland $6.80 $7.98 $8.20 0.67 0.98 365 367 244 360 Sacramento $7.00 $8.21 $9.94 0.77 0,55 294 401 225 219 Tampa $5.75 $6.75 $8.15 1.20 0.89 285 450 343 400 Tucson $6.40 $7.51 $7.80 0.35 0.19 371 425 130 80

Average $6.73 $7.90 $8.36 0.65 0.63 379 465 241 287 Median $6.55 $7.68 $8.18 0.54 0.54 330 413 235 290 Maximum $9.20 $10.79 $9.94 1.20 1.30 833 1,043 530 560 Minimum $5.75 $6.75 $7.22 0.24 0.15 168 204 63 62

Atlanta $5.80 $6.80 $7.30 3,39 4.30 428 368 1,450 1582 Indianapolis $4.70 $5.51 $8.15 0.52 0.52 706 757 366 394 Milwaukee $5.75 $6.75 $7.50 0.66 0.61 608 657 400 400 Oakland $7.00 $8.21 $9.40 1.29 1.16 349 388 450 450 San Diego $8.00 $9.38 $9.00 0.99 0.78 931 1,151 920 900 Seattle $6.80 $7.98 $8.00 1.15 1.32 490 530 562 700

Average $6.34 $7.44 $8.23 1.33 1.45 585 642 691 738 Median $6.30 $7.39 $8.08 1.07 0.97 549 594 506 575 Maximum $8.00 $9.38 $9.40 3.39 4.30 931 t151 1,450 1,582 Minimum $4.70 $5.51 $7.30 0.52 0.52 349 368 366 394

excluding Atlanta Average $6.45 $7.57 $8.41 0.92 0.88 617 697 540 569 Median $6.80 $7.98 $8.15 0.99 0.78 608 657 450 450 Maximum $8.00 $9.38 $9.40 1.29 1.32 931 1,151 920 900 çç Minimum $4.70 ci .. O 2 fl

1.30 3,’s 4A 5 Augusta $4.30 $5.04 $6.40 0.46 0.58 240 240 110 140 Baltimore $4.80 $5.63 $6.30 1.41 1.60 769 721 1,085 1,151 Boston $6.70 $7.86 $9.10 2.68 2.67 569 571 1,525 1,525 Buffalo $6.15 $7.21 $8.75 1.08 1.06 346 343 375 365 Las Vegas $8.50 $9.97 $9.00 2.53 1.87 179 306 453 573 Memphis $5.35 $6.28 $6.65 0.40 0.52 646 576 256 300 Mobile $5.20 $6.10 $7.15 0.24 0.27 205 184 50 50 New Orleans $5.90 $6.92 $5.90 2.87 3.48 561 462 1,608 1,608 Orlando $5.60 $6.57 $6.91 1.67 1.21 133 182 222 220 Pittsburgh $7.80 $9.15 $8.17 1.22 0.82 410 365 500 300 Rochester $6.90 $8.09 $8.20 1.10 1.26 246 234 270 295 San Antonio $6.20 $7.27 $6.90 0.57 0.81 846 931 481 750 San Jose $6.40 $7.51 $10.60 0.22 0.33 673 826 150 270 Tulsa $5.35 $6.28 $7.25 0.52 0.60 375 366 196 219

Average $6.06 $7.11 $7.71 1.33 1.37 423 432 516 558 Median $5.90 $6.92 $7.25 1.10 1.06 375 365 375 300 Maximum $8.50 $9.97 $10.60 3.05 3.48 846 931 1.608 1,608 Minimum $4.30 $5.04 $5.90 0.22 0.27 133 175 50 50

Note: several deregulated and re.ragulated cities are omitted due to incomplete data for 1985 cr1992. Deregulated cities include those using minimum standards, as wellas open entry, Sources Fares &taxis; Derived from International Taxicab and LiveryAssociation member surveys for 1385 and 1992. Data for Phoenix were obtained via Interviews conducted by Price Waterhouse, 1985 fares were converted to 1992 dollars based on the CPI for private transportation costs (USDOL,8ureau of Labor Statistics) Population: Estimatedfrom US Census. 198 population was interpolated from 1984 and 1986 Census estimates. 1992 populatIon was extrapolated based on growth rate between 1988 and 1990 Census estimates. AF1dVUOflIffl Economics, International International Rosenbloom, International for Frankena, Airport presentation December I. Gallick, October Teal, Stalians, Shaw, Seligman,

II. Teal, Paratransit reprinted

Buck, Gelb, 1983. County 1988, Geib, Geib,

the

Roger; Roger

Pat; Pat; Pat;

James;

L.,

Federal

General

Case Operators

of

Edward

1983.

Gene;

from

Mark Joel;

Gorman

1983. San

Effects Effects

Services; Taxi

and

for

and

Taxicab Taxicab Taxicab

“An Studies Sandra;

“The

Journal

Diego, Trade

“Regulatory

The

Regulatory

the

Organization

and Studies

and Mary

Overview

Council

of of

Gilbert,

Seattle

New

Application

Paul

The

David

Taxi Taxi

Association; Association; Association;

Commission;

“The

Department

Bergiund;

of

Experiences

Zealand

Pautler;

Regulatory Regulatory

Transport

International;

U-Turn;”

Taxi Revision

Sisk;

et.

Revision

of

3:1;

al.;

the

of

in

“A

“Impacts

Taxi

An

Does

Taxicab

‘The

1987.

American the of

Taxicab

the

May

Economics

in

Reconsideration

unpublished

Revision

Economic Revision of

and Transportation;

Federal

Proprietors’

Urban

Portland,

Case

Taxicab

U.S.

Worldwide

1984. BIBLIOGRAPHY

the

Fact

of

Regulation

Experience

Against

Cities Taxicab

Taxicab

Transport

in in Antitrust

Book; Analysis

and

Deregulation

Seattle, San

paper;

Oregon:

Airport

Federation;

with

Policy;

of

Diego, Taxicab

Taxicab

Industry:

Deregulation

1985

in

Laws Taxi

System;”

September

of Taxicab

with

Washington;

U.S.

A

Taxicab

Traffic

to

January

Case

Regulation;” California;

Make to

Taxi

Deregulation;”

Study;

1992,

Cities:

August

What

Municipal

Open

unpublished

Study;

Report;

Deregulation;”

Regulation; in

1992.

Sense?;

1987.

January

We

Volume

the

May

Entry;

30,

May

September

Have

USA;”

Journal

1985

Taxicab

1988.

1983. March

1982.

1978.

October,

I

1983.

paper;

Learned;”

unpublished

and

(Final

unpublished

of

1984.

Regulation;

1982.

1990.

Law,

December

Report);

1983.

paper

paper; GeIb, Pat; Taxi Regulatory Revision in San Diego, California; Background and Implementation; July 1981.

Geib, Pat, Robert Donnelly, and Lidano Boccia; Taxi Regulatory Revision in Seattle, Washington: Background and Implementation; September 1980.

Georges, Christopher; ‘D.C.’s Checkered Cabs: Why Washington’s Taxis are America’s Worst;” Washington Post; March 21, 1993; p. Cl.

Gilbert, Gorman; “The Effect of Open Entry and Variable Fares on the Cost of Taxicab Service to Residential Areas;” unpublished paper; March 1984.

Gilbert, Gorman and Pat Geib; The Indianapolis Experience with Open Entry in the Taxicab Industry; September 1980.

Hamilton, John; “Taxicab regulation in Portland, Oregon;’ unpublished paper; May 1993.

Knight, R., D. May, and D. Hoffman; Taxi Regulatory Revision in Oakland and Berkeley, California: Two Case Studies; June 1983,

Lyons, Deborah; Taxi Regulation in a Free Entry Market: A Case Study of Washington, D. C. (EXECUTIVESUMMARY);October 1983.

Lyons, Deborah; Taxi Regulation in a Free Entry Market.’A Case Study of Washington, D.C. (FINAL REPORT); October 1983.

Multisystems; Decontrol and Recontrol: Atlanta’s E.perience with Taxi Regulation; International Taxicab Association; September 1982.

Olson, Charles; The Taxicab Industry of Washington, D.C.: Regulatory Perspectives; unpublished paper for the D.C. Public Service Commission; April 1974.

Paratransit Services; The Quality of Residential Taxicab Service in Washington, D.C.; January 1985,

Shaw, L., Gorman Gilbert, et. al.; Taxicab Regulation in U.S. Cities: Volume2 (Case Studies); October 1983.

“Taxicab Chaos;” Washington Post; January 25, 1933.

Teal, Roger, Mary Berglund, and Terry Nemer; Urban Transportation Deregulation in Arizona;Institute of Transportation Studies; December 1983.

Teal, Roger, Mary Berglund, and Terry Nemer; Urban Transportation Deregulation in Arizona; April 1984.

Wilson, James; “Controlling Taxicabs at Washington National Airport;” September 1992,

Zerbe, Richard, Jr.; “Seattle Taxis: Deregulation Hits a Pothole;” Regulation; November/December 1983.

INDUSTRY

TRANSPORTATION

Reregulation:

UNIVERSITY

Taxi

VOLUME24

L4DER

Industry

PAUL

IN

OF

The

•

MULTI-MODAL

Regulation,

STEPHEN

DENVER

NUMBER1

Paradox

JOURNAL

DEMPSEY

•

L4c

of

Deregulation

COLLEGE

SUMMER

Market

EccwoMIcS

1996

LAW

OF

Failure

&

LAW

& Poucy — ut..not LAW George CIisnsnational FAntn nautics Program D.zut.*r1oN Copyright versity (Quorum Colorado.

In.

H.

The Dr. ProLcssor

I.

&

M’t’nowoy

of

Board

1LaGU..AFION

Washington Paul

author Dempsey

at

Introduction B. Historical A. the C. Contemporary (Economic

Books.

Denver,

C

Georgia

the

1996

Stephen

Dempsey

and

Taxi Houston New Los

Publishers.

University

wottid

Reregulation:

(Quorum

1986).

by

for

the

holds

and

(Quorum Angeles

University; Taxi

Industry

Policy

the York

(two

their

Dempsey

like

Interstate

Antecedents

the

has

author

the

Books,

of

to

1987);

volumes,

District

written assistance

Institute,

Statutory

Denver.

thank Industry

following

Books,

D.CL.,

is

Commerce

Ta.rn..n

1989);

and

Professor

more

of

Greg

Butterworth

1992); 1990);

in

Columbia.

Law He

LAw

degrces

of

McGill

the the

than

Hall,

&

formerly

OF

Modem

&

Fs.rxrG

Commission

Tssz preparation

&

Regulation, of

73

Regulatory forty

John

Ecowoi.ac

Cor.rmwrs

FOREmaN

Paradox

University. Law

A..BJ..

Soc.z.

1993);

law

served

Joiner

Buo:

and

review Taxicab

Pouc

Azau.INZ of

in 3.D.,

Director

as & Rsoui..i.non

Ttsn

this

Washington,

He

Criteria

Sam

an

Paul

articles

of

University

EcoNce.ac

article.

is

FA.a.uan

IN

attorney

Regulation

Deregulation Daxnaur1oN

Scinta,

admitted

of

Ir

Market

Stephen

and

the

RrxIo?.t.a.m. Governing

D.C..

IN

ID.

with

six

ce-

of

Itansportation

CONSEQtJENCS

TRANS?ORTh.TION

to

books:

Aisu.n.mz

Georgia;

.ndidatcs,

the

pactice

Dempsey*

Failure ....

Civil

&

AvI.noN Avz.noN

Dzaao.

LLM.

law

Aero

Uni Law

&

74 76 77 78 78 79

o

in 74 Tran.sporra:ion Law Journal [Vol. 24:73

D. Chicago 81 E. St. Louis $2 F. Boston G. Minneapolis $4 H. Denver W. The Economic Characteristics of the Tan Industry 87 A. Industry Size and Structure 87 1. Radio-Dispatched Cabs 88 2. The Cabstand Business 83 3. Cruising Cabs 88 4. Public Contract Services 89 B. Industry Costs 89 C. The Passenger Market 90 1. The Transportation Disadvantaged 2. Non-Residents go 3. Afflnt Residents 91 V. Market Imperfections & Theoreticai Explanations Therefor 91 A. The Absence of a Competitive Market 91 B. Imperfect Information & Transactions Costs 93 C. Externalities 94 I). Cross-Subsidies and Cream Skimming 96 E. Economies of Scale & Scope 97 F. The Absence of Sound Economic Conditions 97 VI. Bipolar Views on Regulation and Deregulation 100 VII Empirical Results of Open Entry in the Taxicab Industry 102 A.Entry 102 B. Operating Efficiency and Productivity 105 C. Highway Congestion, Energy Consumption & Environmental Pollution 106 D. Price 107 E. Income 110 F. Service 111 0. Adn,inistrative Costs 114 VIII. Summary of the Empirical Results of Taxicab Dereguiation 114 IX. The Need For Governmental P1nr’ing & Oversight 116

I. INTRODUCTION During the last fifteen years, Congress has deregulated, wholly or partly, a number of infrastructure industries, including most modes of transport—airlines, motor carriers, railroads, and intercity bus compa price causing which flies.’ 1996]

tury, notions tive straints government industries, nomic jettisoned in tion—the circle nies. foundly located

population), limited local sky,” common vice tion Rail Trucking the TRSpORTATgON 1980,

nON 1994. nON economic empted touched M’rri4oz.oay

& Political

the

Lea

Surface

market In Act

Act Despite

I.. Today,

2.

3.

the

LAW

(1989); standards market

and

See

from

taxicab

However, Deregulation

[PC&NJ abhorred

L. ideological

Such 1920s. Taxi

much a See,

See l,y on

Change of of

of Industry entry waste Bus in

unsatisfactory

regulation generally,

Rev. &

nation

Freight service

1978, federal 1980, carrier taxi

it today, economic generally the the

legislation PAUL e.g.,

regulation,

Regulatory

RaouL.A

(1992).

to

nearly

Industry

of

can

in

usually failure

this

1(1989).

(restricting companies.

The Beginning

the industry.

the

PAuL set freedom and state Regulatory Sunbelt, (1986),

(2)

favor Forwarder

Do’sav preemption. (e.g.,

governmental

do

P,i.n dedicated

of the

we

Motor options

International obligation Choice

passionate

noN

Paul the

movement,

just, all

the and includes

DEsEY, inefficiency,

little

emerged Reform

and gave

live

under liberty.

experience

of Pa,.’say vehicular Regulation,

large

surface price

Dempsey, (1993).

through

local Carrier that

Between

& totally to

PAth. Reform

reasonable,

Deregulation

resumed Americancities

in

the good they a

Ar4paw

the

birth

enter Typically, Act

regulation to virtually

half a and an

Tta

seem

passenger Air

DEUPSEY,

of Air Note

Act

number

standard While

&

and in

of Imperfect Act

one free

era Market desire.2

or

deregulation, and pricing

‘flansportation

Wrujj.t and

nondiscriminatory to Socz.kz. medium-sized Cargo

1982, century

of into while a

with

however,

Gorrz, of economic fundamentally

partially

comprehensive where Deregulation

Act 1980. powerful economic

mOde

market

the

1994,

of in

and

transportation driver

the every

Roaeitr

Deregulation Failure a

regulation

of

Regukilon

of

&

the

taxicab denying of the business

and the

Tnos,

market Civil

Auin

and 1986,

EcoNocc

firms,

later, nondiscriminatory began

the that

of

“public airline,

Household

city late

#nd deregulated

safety capitalism, Competition

ThIn

Hwv Aeronautics entry

regulation.

transportation

the

contemporary and conventional although regulation

L,4w

communities

and Regul€nory

andlor more that

deregulation

DERECULATrON

can 19th regulating

Act Negotiated

consumers VI

industry railroad, or

of

& at

back

CONsEouts

convenience

imperfect controls

& standards, ideological

of

of allowing

service,

Goods

Reregulation

odds

taxicabs embraced

do

EcoNoac

the the and

1977,

than

&

Board

Act

the

again

has

governmental little

and Wru.w4 Federal

U.S. their Failure

of

Rates

Transportation with

early

the

of

Regulation,

ratio

remained

local

20 wisdom

Sunset

infrastructure as trucking

has

24-hour the

1979,

fares, Congress regulate

the politicalleco

Airline

& wrong? to involves:

was

taxi

REout.TIoN as

Act cities,

A-c Aviation movement

immutable

manifestly

it

or

L’.ssnz

20th

THo, and

re-regula

of

come

range taxi

competi

the has

well Act

Catalyses

of

DeoutA.

so compa

largely

Deregula taxis

(3)

industries,

is

46

1993,

neces

Staggess

has

of Cen

thins

most

since radio

their

Act that

Act pro

W,.

AVTA FAmE as

full

re

ser 75 1984,

of

(1)

pre

to

the

un

for

of

04 of

a 76 Transportation Law Journal [Vol. 24:73

dispatch capability, and a rninirrum level of response time), and (4) finan cial responsibility standards (e.g., insurance). This article explores the legal, 4historical, economic, and philosophical bases of regulation and deregulation in the taxi industry, as well as the empirical results of taxi deregulation. The paradoxical metamorphosis from regulation, to deregulation, and back again, to regulation is an inter esting case study of the collision of economic theory an ideology, with empirical reality. We begin with a look at the historical origins of taxi regulation.

II. HISTORICAL ANTECEDENTS OF MoDE1ui TAXICAB REGULATION Hackneys (horse drawn coaches for hire), the predecessors of to day’s taxicabs,werregulated shortly after they appeared on the streei of London and Paris between 1600 and 162O. In 1635, Charles I ordered that London hackneys be licensed so as “to restrain the multitude and promiscuous use of coaches.” Nineteen years later the British Parlia ment adopted a regulatory6 regime which limited the number of hackneys. 7 In the United States, governmental regulation of private firms, rather than public ownership, has been deemed the appropriate means of protecting the public interest in economically viable modes of transporta 8tion. Although some attribute comprehensive regulation of taxicabs to the Great Depression, in fact, regulation began in earnest during the 91920s. In the 1930s, the growth in unemployment and unsold 4. See Michael Kemp, Taxicab Service, in PA-TR.nsrr Naot.acran OrnoNs ‘or UR EAJ4 Mosu..rry 64 (Urban Institute 1984); DE1.’s & TH0MS,supra note 1, at 1: Roger Teal & Mary Bergiund. The Impacts of Taxicab Deregulation in the USA, 3. T.NsP. Ecoii. & POL’Y 37 (Jan. 1987). 5. David Williams, Information and Price Determination in Taxi Markets, 20 Q. Rev. o’ ECON. & Bus. 36 (1981). Actually, common carrier liability owes its origins to Roman Law, beginning about the year 200 B.C. See Da’sev & TH0MS, .wpra note 1, at 2. 6. U.S. DC?’? OF Tsp., TAXZc.’.aREGULATION IN U.S. CrrrEs 5 (1983). 7. Id. at 6. The London Hackney Carriage Act of 1831 (as amended in 1843) was the first comprehensive taxicab regulation ordinance; Gene Stalians, Regulatory Revision and the Taxicab Indu.rtry: What We Have Learned 1, Address before the 50th Annual Convention of the New Zealand Taxi Proprietors’ Federation, Wellington. New Zealand, Aug. 30, 1988. 8. WaiL.j. BAJurn & M.ny Ba...rtn, URBANTAX1c.&as:PRost.at-s, Po?rrIAJ.. ANt) PLANNING, IN PROEDTNGS OF THE CON?ER.EN ON TAas As Puauc Tasrr 40 (Univ. of California, 1978). Modes of fransport which were not economically viable in the market (e.g., urban railways, Amtrak and the U.S. Postal Service) were provided by government in a process John Kenneth Gaibraith is said to bave referred to as ‘Lemon Socialism.” 9. M’jtx FRANJCENA & PAUl. PAt.TFLER, AN EcoNoMIc ANLYs1s OF T,..,oc..a RaGtJLA rxo 75 (Fed. Trade Comm., 1984); See Kemp, .wpra rtote 4, at 65. ‘The campaigns of profes sional nab associations for vehicle licensing during the late 1920s were a direct response to the disruption in the market created by hii-and.run entrants.”; see also Edward QaIlick & David Sisk, A Recontideration of Taxi Regulation, 3 .LL ECON. & ORG. 117, 123 (1987). 1996] Taxi Industry Regulation, Deregulation & Reregulation 77

automobiles produced a drastic increase in the number of taxicabs.’° While fewer people could afford to ride a taxi, the number of taxicabs skyrocketed, while occupancy rates and revenue per taxi declined.” Ca pacity and demand were moving in opposite directions. An editorial published by the Washington Post in January 1933 illus trates the public’s perception of the chaotic state in which the taxicab industry found itself:

Cut-throat competition in a business of this kind always produces chaos. Drivers are working as long as sixteen hours per day, in their desperate ef forts to eke out a living. Cabs are allowed to go unrepaired. Together with the rise in the accident rate there has been a sharp decline in the flnanciai responsibility of taxicab operators. Too frequently the victims of taxicab accidents must bear the loss because the operator has no re sources of his own and no liability insurance. There is no excuse for a city exposing its people to such dangers.Z Economists of the era argued that taxis were a declining cost indus try; excessive competition between numerous small operators decreased carrier efficiency and increased consumer 3costs.’ The U.S. Department of Transportation also summarized the tenor of the times: Theexcesssupplyof taxisled to fare wars,extortion, and a lack of insurance and financial responsibility among operators and drivers. Public officials and the press in cities across the country cried out for public control over the taxi industry. The response was municipal control over fares, licenses, insurance and other aspects of taxi 14service.

III. CoNTEPORARY STATUTORY AND REGULATORY CIu-i-nsuA GOVERNING THE Ta INDUSTRY Virtually all municipalities engage in taxi industry regulation under state legislation requiring or permitting such regulation, which itself acts under the guise of the state’s police power. Although sometimes chal lenged as unconstitutional on various grounds, or preempted by federal law, these statutes and municipal ordinances have been nearly universally

10. See Gnat & RaKT Ttn T’.xxc.s: AN URBANTRANS?ORTA TIoNSURVIVOR 149 (1982). 11. FRxm.. & PAVTLRR, supra note 9, at 75. V 12. To.xicabChaos, wAss. Post, Jan.25, 1933, editorialpage. t3. Sandra Rosenbloom, The Taxi in the Urban Transport System. Tan PR1vm CHAL r..ENQEto Pt.mL]cTRANSPORTATION (Qlarles Lave, ed.. 1984). Similar argumentswere made in the 1920s and 1930sin favor of regulating the trucking industry. Sec Paul Dempsey.Running On Empry: Trucking Deregulation and Economic Theory, 43 AfrN. L. Ray. 253, 304-306 (1991). 14. U.S.DEP’T OF T?...j5p., supra note 6, at 6-7. scrutiny

Although vested The

grounds aLso nances were

carriers regulations, nicipalities which

sion 1983), to regulations orbitant merous

taxi require ger proaches cities treme ance safety, boards upheld.’5 78

regulate 21. 20. 16. 18. 17. 15. 19. Bus review Rudack

regulation. In New The

pick-up

Typically, an (Evezy ccii. limited

of

are of See See California’s Peter N.Y. See under Id.

require that Regulatory

deference

in

which

restricting contrast

‘Iltie insurance ordinance

that property,

than

levels,

state derne4

medallions), of Teuch Fley

the e.g.,

to

York

examined. it v. Gea. Suzuki, city

may the intrastate the VI violated

concerning

the Valentine, economic

taxis

to Golden Police

their

regulate and of v. Sherman

of

or the v. Mon. local

taxis 105 Reform it itself statute

11,787 or

City Texas

McKzieaiiey. also the

to county Murphy,

New did Unregulwed by

the be

registration

and resolution S. claimant’s

differences. discharges.’7

New Federal entry, § State

Commissioner.’8 not taxi

are Ct.

reviewing establish 181(1). has 295 insured

generating is Act,

As

number Act

York shall Transportation and entry,

and in

service regulation preempt typicai 1865 256

the exit Ihnsit

York,

regulated industry.2’ N.YS.

we regulated as Aviation 1937,20 of protect 325 in due California N.Y.S.2d B. Taxicabs, it 1982, setting and

permits (1983),

supervision

A. regard fcU shall

such

for N.Y.S2d

restrictions intrastate process Corp. of

and 976

which

standards. rate

courts. Los under although the Act

firms some causing NEW

specific Jurisdiction

of

as Here,

see, (1937) 25

licensing 49 regulation, to

at public v.

prices

its of

its ANGELES These righs).

taxis “controls, (1965). Tp_A.Nsp. the taxicab 165 City

permits

state

the

Typically, regulation 1994 Law

and

Yoiuc municipalities

their measure taxis providing

a In “state (taxi health,

and (1971). municipality’s the of amounts.19

concerning

local preempted

in this

(usually

Their number municipalities

statutes transportation Journal Los did

of Q.

similarities

statute since action”

medallion operation

some

municipalities safety, of not

to 129, taxicabs.’6 section, for Angeles

limits

level,

the

of the

decisions apply Interstate

promulgate 132

the unsuccessfully intrastate exemption

legitimate

of

of transportation

require and

on municipal taxicab

parking

to

or (1995). with 726

taxis to

the

1930s. welfare service

several

a

price of

adopt other are the F.2d

may Commerce

mileage

New regulation regulation

taxis nation’s

city

(with municipalities

are to taxi

far

to rendered by

to 1430

and that criticism

Medallions

restrictions challenged

ordinances ordinances enact of [Vol.

industry. of adopting

rules

or enact

York

given more

reach

has pa.ssengers.

the legislation. (D.C.

passen

th Commi.c

county of

basis), survved

major 24t73

been

ordi in motor

issu

mu

taxi and

nu

ap ex ex Cir. See of on Bcej may v. ulations the the pair, by requires temporarily ters,27 and direct scribes surance, Board services tions, dence with insurance vice. tenon, venience earning and on 1996]

San

area 32. 26. 25. 22. 31. 30. 27. 29. 28. municipality 23. 24.

the

C.&i.,

the not

honesty The The reliable The

Francisco,

vehicles

ated

entry, seat . OF

Tax. Id. Id. DErr.QF Id.. Id. Id. Los Id. Id. Id.

within adequately regulate

route29 Board

of

rate .“,

the that

the total

Gov’-r

Taxi

a

(including

are TRANSP.

a

within

Los city § § § § § § § §

Licensing

and

Transportation

fair ANGm..as

belt that requirements”

71.25. bearing 71.23. 71.24. 71.22. 71.13. 71.14.

Loc..

an

71.16, circumstances 71.01

Board

for

its

rates regulation,28

meeting

or

passenger

existing number

Industry possesses

of CODE

155

the

of

of Angeles

jurisdiction,

approved necessity”

and

carrying

the

and

existing and

permanently

driver, CQMM’N .

Transportation local

Cal. Los 71.19.

Gov’r

71.10.

jurisdiction

Mur’.

§

and

reasonable

serving by

may

maximum of

not

53075.5

other

Rptr.

taxi

an

Angeles

not

Crr the 71.20,

of

the

taxicabs new

Cona

Regulation,

ordinance

(1991). Cona, business

ownership

and

taxicabs transportation

but

industry charge

more consider

identification

319 persons

in

need

OF and

city Commissioners. (West

under

requirements), a

71.21.

also

of

the

entrants

Aw’i.

(1979).

common order

Los

requirement

ch. than

the suspended

C.

age requires

jointly Department

other

return

if

Supp.

or

more

public

VII,

ANCEL.as,

Commissioners interest.” “are

it city

§215.004 “. eight practices

which

providing

the

includes

is

of

Texas

HOUSTON

demand.”24 to .

already art.

or

owned 1996), Deregulation

requirements .

vehicles,

under

persons,

gain

on

carrier than are

applicant’s not, county....”

system

1,

service.” .

an

requires

a

T..xxcn TEX.

(West

or . their §

The

municipal

or driver

licensed

cleanliness applicant

that entry .“,

governed

the

71.00,

the of

under

revoked.3

excluding

the the

Loc.i. are

California

In

service

1995).

inspection, Finance and

the

capital of

typical

prescribed

the

Rt.n..as services,

evaluating include 71.12.

Houston

into

and not, or

municipality

color

property

financial

&

which

Gov’r. “.

efficient

vehicle

the

regulated

driver to

Reregulation Public

obligations.32

by under the AND . devoted

of

requirements

driver, and

prove

and .

The

precise

and

the

vehicle, whether will

rates,

taxicab

maintenance, REGULATIONS

municipal

215.004 Utilities

Adrrtiriistration

fare,3°

capability, the to

permit

take

by

signage,26

normal property

which

rules

management,

Los

regulate

“ensure

“public

the

to

PC&N

safety

safety

(West

the

Commission city. is

such industry,

Angeles courtesy

adopted

and

existing

oper

may

“in

condi

not

of

Code OF

People

most

con

which 1995)

safe

reg

me

evi

and ser

cr1-

only de

in TtE re

be 79

/ requires where relevant. company, consider that applications on permits director bearing vehicles vincing under tember. other which Houston hicular standard, tions to administration per-cab 80 prevent Flat from a increased mile the in need Houston. competition

new

the

smaller

increase 33.

34.

esting

(3) the complied In (10) taxicab agenctes (11) trian (13) (12) (6)

Despite rates

and

$1.50 for

facts

number

approach previous

all

are

determining

the

in

standard 1993, fare Hourro,

The Number The fare

retthls

not more a

the

Code, S0.30

The The Whether Any

applicants and

alike.

which

to under

Cab cab evidence,

operation,

to

for

the “ “public

following denied

permit

in

for

only

taxicab issuance by the effect Houston

wars for

Houston’s

of

resulting

with total The of

competition be

the

companies,

the other

for conducts permit director

Z)eregzdadon

hearing

pedestrian),

requiring

allowing by mass absolute

prior

the trips permits, the

of enumerated is

director

among first number

operated,

each

Houston

the Tax.,

only the of

number

to rjit

vehicles whether

business

are

$400 facts

amended

unless

month. convenience

and transportation

of to

additional within the

Intercontinental

2/11

Regulatory effect requirements

were

may

additional

that relaxation

by

denied

1993

the holders,

additional

HousToN,

Cone

easier an discretion

taxicab

the

the

potential taxicab application,

in

of

in

mile

the

of

City

action Transportation

deem conducted hearings to

Draw:

public an

in

the upon

taxicab the

of

factors

Ordinance larger held director

the

the taxicab

ordinance,

be the issuance or

Houston,

effort the unless

entry, and

Council vehicles

industry.

permit downtown

the

permits

219

operated. ODINANCP.S almost the relevant.”

Affairs applicants

which of

economic

penruts,

Tx., convenience

Praire,

in

and

standard

taxi $0.30 effect

in

such

permits

of number

under

entry,

mile, to

permits may the Department business

and

it they determining

Airport

annually.

the

public

of

hearings

93-155

fleet.

respond

voted Texas.

appears upon

was

70%

as Coox

“any

to so

for

director

Office

The

additional city.

deem

CriticLsm,

while

are

effects necessity” a area. of since

the in

be

while

vigorously each The

impact

“public in

of convenience

the

partial of to Houstoe,

(L4H)

of has

able new

of flied OF

are Law

is

and city

of other

operation. The

to

relevant. to the

eliminating existing

46-66 that award

Houston Houston

the

shall additional traffic Ho’jsrow,

on

On.cxs Houston

permits

the traditionally whether

met.33

be a

to

in 2,098 on necessity retains

able

director

permits.

rosier entry deregulation

traffic City

Hourros

convenience

pricing and

Journal held must

City

provide

January (1968).

take

opposed 49

existing

the

facts

congestion,

permit

standard,

maximum annual of

new

Code to

ordinances and

of

economic city in

congestion, public

has firm

into

a

11/45

Houston on

Tax.,

of

In

controls in

require evaiuate prove,

Houston

even-numbered

provision

The

the taxicab clear

of been

necessity

the

increased

holders permit

?os-r,

increased

by

traffic control consideration:

operation,

pennies

assessing

46-66

by mile

even-numbered

46.66

and

convenience

Yellow Houston

Ottnt’3ca

department

director

vehicular

waiting controlled

and

the

outlook

the amended

will Sept.

require in

permits,

by

to necessity

in

holders, the

and

(1968).

providing

provides

City of

can

convinclng congestion

issued

the

51.50

allowing issuance

the

which

the

Cab.

remain clear

number

the

upon

13,

Code

time

taxi

be

Council

and

and

level calendar

the

the

predominantly number for by the

of

may [Vol.

§

However, taxicab 1993. but and by

§ In

met

standard”

46-64 fares

existing

charges in

93-9

finance

and

Yellow requires

a a

years

pedes in director

an

the of

applica addition

the

of

of

maximum also perceived

part: PC&N

impact necessity

evidence

and

effect

signaled increase

the

existing

deem

hi

24:73

first

slightly City taxicab

(1993).

of

years.

con

routes

(ve

for

“any

Sep

Cab and

also

the the

of

all 119

to

in

of

so

to

a 19%] TaxI Industry Regulation, Deregulation & Reregulatlon 81

D. CHICAGO

The Municipal Code of Chicago provides a system of strict regula tion of license acquisition and fare 35setting. The code is typical of the entry criteria imposed by most cities on the taxi industry. It requires that new entry be permitted only where consistent with the “public conven ience and necessity”, which is to be determined with an evaluation of public demand, safety, the economic impact on competitors, and the wages, hours and conditions of 36drivers.

between the city and its two major airports, IAH and William P. Hobby Airport (HOU). Any taxicab departing either airport with passengers is required to pay a flat fee to cover the city’s administrative and related expenses, and pricing to and from IAH is controlled by a flat rate scheme based on the division of the city of Houston into seven zones. Taxicab standing queues have been established at !AH, limiting passenger pick up to onl those cabs that are operating under a valid city permit, and eligible cabs may receive a priority reassignment (thereby moving tothe front of the queue) if the taxicab returns to the departure zone within forty-five minutes of its previous departure. HousroN, Tax., Coos o CYbmr.e.NcEs§46-26 (1968). Although the city of Houston continues to regulate the lucrative airport routes, and general meter pricing, it remains to be seen what effect relaxed entry standards will have on Houston’s taxicab business. One Houston City Councilman has suggested that relaxed entry has signaled the death knell of regulation. Cab Deregulation Draws Praise, Critidsrn, HOUSTON PoST, Sept. 13. 1993. City Councilman Frank Mancuso is quoted as saying: “In my opinion, we no longer regulate cabs. It’s that simple. Everybody and anybody is going to be out there now. It doesn’t bode well to lose complete control like that.” 35. CmeAGO, hi.., MON. CODE,ch. 4-348-040 (1956): In determining whether public convenience and necessity require additional taxicab service, due consideration shall be given to the following: 1. The public demand for taxicab service; 2. The effect of an increase in the number of taxicabs on the safety of existing vehicu lar and pedestrian traffic 3. The effect of increased competition; a. On revenues of taxicab operators; b. On the cost of rendering taxicab service, including provisions for proper reserves and a fair return on investment in property devoted to such service; c. On the wages or compensation, hours and conditions of service of taxicab chauffeurs; 4. The effect of a reduction, if any, in the level of uet revenues to taxicab operators on reasonable rates of fare for taxicab service; 5. Any other facts which the commissioner may deem relevant. If the commissioner shall report that public convenience and necessity require additional taxicab service, the council, by ordinance, may fix the maximum number of taxicab licenses to be issued, not to exceed the number recommended by the commissioner. 36. CIUCAGO,hi..., MON. CODE,ch. 4.348 (1956). In 1960. the public vehicle license com missioner of Chicago was granted authority to issue additional taxicab licenses up to a maximum of 4,600, increasing the prior limitation of 3,761 medallions. Under the municipal code, the com missioner was required to report a finding of “public convenience and necessity” based on public demand, traffic safety considerations, industry competition effects, and commissioner discretion, before licenses could be increased up to the 4,600 ceiling. Over the last twenty-five years, taxs cab medallions were predominantly in the hands of the two largest cab companies, Checker Taxi Company and Yellow Cab Company. These two companies controlled 80% f the Chicago licenses, prompting the Chicago City Council to propose the issuance of 1,500 additional licenses in 1988, to be distributed over a three year period, .with open entxy slated for 1991. Faced with posted PC&N, 82 1.ipinshki of industry. medallions since who the Thin.. of share putting when $6.50 Despite thoroughly up than regulation, medallion tery, lion Council their 1988, clear regulation liberalized Companies,

Chicago,

“sham

prospect

good

39. 37. 38.

Chicago’s Within

passed

plicant; icab Board of be properly [Wlhether by space those received

whose

taxicab

whether 1981.

at The Vehicles ia.L,os

of Checker

Mar.

the

the

bearing

rate

Cl,

St. Id. used; Id. Checker

the

fares

&

companies”

service determined

through

of agreement.

entry

by in St.

appearance

medallion Jerry upon 9, providing

to

§ § Cia. market

three streets

Lotjrs. Jane

C2.

of

may

Angeles, It

increases

license

anthg other

8.98.113. 8.98.101. the

which

1990,

$20,000

the

the

Checker

and movement safe

the meet

rapid

Louis

in establishes

and

Tp.in.,

The

alive,

the Tanner,

Feldman,

and

must

the

number,

years. deem

market cab

within 1991

Yellow the

major increased

Mo.,

at

share

by

the

investment

condition

deregulation,

demands

the

new

an

Yellow

C4, S5S0 streets which

up taximeters,

company, on

of

given

lottery,

city May the

and of that

Chicago

increase

the

advisable Onn’.ajs be

roughly Taxi

for

needs

U.S will

the

CS. on

and will

toward

the

Cab

the the

and

public,

kind, Yellow in

a

Transportation

24, financed

ordinance

the City

collateral.

Cab. pajp.ted

three-mile of open

increase cities.

Deal

the

Rate relinquished

be traffic

Philadelphia.

a City;

president

the

were

of

additional

1991,

to

effectively of resistance

the

City well Board

in

30%

open

for of liberalized

type

Checker the

Although S250. medallion

basis

Gets

the market Cab medallions both

increases

or

detennined

See that city

Chicago

with the E.

at

congestion

Council

public

the

in to 58795,

necessary.37

in

painted.”39

of

public;

(.

P. in Council’s

for

of taxi James

purchase

vehicular 59% March, The which

is

existing

1988, of

of:

equipment

Davis

by ST.

licenses

Checker and

circumventing

for fare transportation

license;

distinctive

reassignment,

and

If

also

ride

made the entry

value

Public survived require

Chicago the has

by

the

of

Strong,

a

8.98.023.

Louis the or Yellow

Law

S4.60 may

to

City 1990, in

Szymaczak,

medallion

1,100, schedules

1998.

O.X large

and of typical been driver

whether

by taxicab

have will

are

Chicago

drops,

Taxi

and financial

licenses

and

result, of

the

in

the

After

Service

Chicago’s Journal Tune

a agreement

and

awarded demand

Taxis

Cab

taxicab coupled particularly traditionally

Chicago

violated

defaulted pedestrian,

New Company,

challenge

City

the

colors38 over other

proposed

as

of

the

service

color

forged

in which

a to

for

and

Cay

lottery

city’s

Bank responsibility York

of

Dig

of those filed

1988.

must

a

companies

City

with

to

drivert

for

rates

Chicago was the to

relevant

ten

whether

may Gets

passengers, scheme

costs

on

independent

an Deeper

to

goal

Inc.,

impact

City.

Royal, is

hesitant

will

issue

increased

the

1988 winners

year

and

With with able or

will

the

agreement

its

governing

were be

not

also

Rare

in $3.60

of

testified additional

relinquishing

forge

deregulation

in financing,

ordinance

to return

be period. for

in

equipped

limiting each Cia. must proposed

sufficient

facts

medallion the

affect

significantly and

1991 certificates

keep l’iaoiy

to

Chicago,

would are

of preserved

Taxi

another

increase safe drivers This., [Vol.

parking

issuance the

before for

were with

able

approved as

clean,

taxicab

the

be

Ann

Ride,-,

the

the

the

be

tax the Over by

use

ap the

the

move of

to oers, to

it to the ian.

scheme

24:73

at

“in market

limited by medal

setting

Marie

a

driver with

lower

is fares.

1,300 taxi

limit

least

Cin.

of City

City

fare

Cab

first fit,

lot

un 28.

of

to

a

a 1996] Thxi Industry Regulation, Deregulation & Reregulation 83 by the Board of Public 40Service. To ensure compliance, vehicles shall be inspected annually. Liability insurance must be 42maintained. To elimi nate conflict4 between drivers, specific rules of conduct apply at taxi stands: ’ Taxicabdrivers entering a taxicab stand shall do so from the rear, and shall proess toward the front thereof whenever the opportunity to do so is pres ent. The driver in the foremost position shall be entitled to serve the first customer arriving at that location, provided, however, that should the cus tomer elect to employ any other taxicab,he shall have a free choice thereof at all 43times. A common carrier obligation is imposed on drivers to accept all po tential patrons, except service “to anyone who is intoxicated or may pres ent a personal safety hazard, and . . . any person in furtherance of any unlawful 44purpose.” F. BOSTON Legislation promulgated by the Massachusetts legislature in the 193Osgave the police coimriissioner of Boston the power to authorize not more than 1,525 taxis to “suitable persons, firms and corporations who - are oiers of vehicles known as hackney carriages . .“ Regulations promulgated by the Boston Police Commissioner call for a $10 fee for a hackney carriage license, and a $2 fee for a hackney driver’s license, probably the lowest such fees in the nation.’ Nonetheless, because of the limited number of medallions, issued, the market price for an existing medallion has approached $90,000 in recent 47years. In 1989, metered fares were increased 19%, raising the fare for a two-mile trip from $3.50 to $4.30.48 Boston Police regulations also call for annual vehicle inspections, a card displaying rates in the rear compart 49 driver ment of the °5taxicab, etiquette in taxi 5stands, appropriate ap 40. Id. 8.98.107, 305. ’ § 41. Id. 8.98.155-167. 42. Id. 8.98.172-173, 185-186. 43. Id. 8.98.425. 4.4 Id. §8.98.449. 45. Acts of 1930,cIt 392, 4. 46. See Crj-y oi’ BosToN, RUI.ES A.ND REoI.n....i-IoNsESTABUSD BY i- Pouca COM. .OSs1OHER FOR CITY OF BOSTON FOR HAcx1Y CjuuAoEs Ar41 H.&OcN Sw.rs o ACCOR.OANCE wi-i-si Cii-a 392 OF rim Acrs OF 1930, as o.mended, 2,4. See aLto, Crr’ o BosroN, HACICNEYC.j’cja TRAINiNG MeuA,L. 47. Suzuki, supra note 20, at 130. 48. Mark Muro, Roache to Boston Cab Drivers: Take a Hike, BosroNGLOBa, 3uly29, 1989, at 18. 49. Crry OF BOSTON,supra note 46, §7. 50. Id. 8, 17. 51. Id. 12. 84 pearance52

operating dead council considered: whether “greater achieve

qualifications

passengers,6° permission,62

nansit.

53. 55. 54. 52.. 56. 59. 57. 58.

61. 60.

62.

service

the tars; demand tion [T}he factors prior prior prior [T]be posed and the cil vice

The

The

Drivers

bodies.54

may Id. Id.

Id- Mnwwous, Id. Id. Id. Id- Id. Id.

Id..

safety

experience

must

and provided disciplinary

whether “.

the safety

record experience

record

Minneapolis

level

financial

to Minneapolis

§ §

or

as

conditions .

341.100. 341270(a). 341.200. 341270(b). 18. 341.170. 341.110. 28. deem 341250(d).

for

and pollution;

be 15, .

public

of

the

the

must

conduct

a

give

and

of not

service; licensed It

20.

of

vehicular

of

and

better

additional

city behavior,53

by relevanL degree

is

new

capability

service

compliance

quality

and

overcharge Mnri.i., unclear

actions them in

the

be

convenience

protection

council

the

the

the

by entrants,

competence Transportation

ordinance

cab

for applicant a

courteous,58

of

Taxicab and

complaints;

available

Tac.&s

taxicab

the of

hearing,

receipts impact

whether

competition

innovation

against

and

service

may service cab

pedestrian

G.

applicant;

with

including

responsibility

them,63 to

in

business; on

deem

requiring

oers

the

Oinn&c.s lr?tEA..PoLIs

drivers taxicab and

the

Ordinance

also

the upon

of

the

being

at

existing

the

for

ta

in

the

taxicab would

assist

which

relevant.56 necessity and

past

traffic; public.

specifies

delivery age

Law

the

a

provided driver

drive

and

request,6’ stand

the

applicant’s

such and

prohibition

in

and taxicab

the

improve

passengers,59

of riding

level

ordinance

cli.

vehicle

the

Journal

areas the

must

capacity

has

other condition the

safely,64 .

of

drivers.”55

341 city

.“;

impact

requirements warrant

following by

and

services;

operators;

applicant;

in

jettison

public.

(1993).

and

three

not

the

drivers; owners; factors

existing

council

which

quality

including

the

upon

level

against

of (3)

smoke

carry

new

a

the

the

public

purposes:

as

it

accept

passenger

and establish

the

taxicab the the .

of and criteria

traffic In

consider:

has

the

impact

.“;

vehicles

entry,

liability

taxicab

regarding

complaints

applicant’s such applicant’s

applicants

without

transporting

quality determining

city

operated; need

(2)

[Vol.

conges

all

opera

who

other coun

upon

shall

provide

the

pro..

“better

and

ser

(1)

paying

of

insur 2.4:73

dies

their

city

the

be

to

In justified

mission tions convenience the shorts, change legislature erned orado change general sion Miller or to “without public Until Inc. ers “T-shirts, ance,65 1996] “Under 10.105(2), to

show

prescribe

suspended in 72. 70. 71. 69. 64. 67. 65. 63. 66. 68.

v.

granted Miller necessity area ticular adequate this (U)nder

restricting

standard

Under Whiie

Bros., 1917.

utilities. Pub.

were

1994,

is in

welfare

[the by Id. Juthcial The Id. is The Prior Id. id. Id. Id.

‘substantial’

theory

cut-offs,

question

is

and

Taxi

insrructhe

1994

C.R..S.

changed

[PUC]

unless something

area

Bros.,

inadequate. § § § § Ut!.

the

concept

where Colorado

Colorado the Inc. 1917

underwear, 341.120. 341.130. 341.500. 341.250(n). 341.980.

341.380.

to for most

substantially to

entry

the

pass

by new

of by

1963

is

the

Industry

policy

and

1967, and

Comm’n,

v. satisfy of

standard

1973.

common

for

entitled Cola.

Inc. regulated

the providing

[the

the

Pub. adequate

the

prior trunks,

regulates

entry

of

city

C.R.S. inadequacy as

“regulated

clothing

agency

a

licensing

motor legislature Colorado necessity

good

Supreme of

standard v. regulated

Geucrai

to

driver

Sees.

the

Ut!.

applicant

of

regulated

Rates

Pub.

governments

to

under

the

192

carrier

“regulated

needs

Regulation, monopoly,

a

protection

an

precedent

common service tank

Comm’u, of

Laws.

or 115.1.2(5)

cause

framework

standards

Cob.

i.nadequate,72

Util.

are

to legislature drivers Court

Assembly] training

in

monopoly] anomaly a the

“regulated authorized

similar

in

service

of

one for

standard monopoly,

existing

monopoly”;7°

deait

cli.

tops,

537,

was

Comm’n,

the

the

could

H.

after

carriers taxi

observed

185 of

we

against

interpreting

110,

additional

(Penn.

to

541, already

with

area, for

“regulated

monopoly”

shall is

Colorado

attire. Save

Cola.

of course,66 regulate

be services.” intended

DENVER an swimwear,

justified its

industry

of

Deregulation in

§

notice

the

561

demonstrate

additional entry

of

35. in

competition employed

applicant

PUC 185

“regulated and

competition.”71

Supp.

that

held

that;

414. wear, better

property

H

being

P.2d for

In

Cob.

341.710-810.

standards no ,,

the

to

competition.”

that unless

to

conunon 421,

1969,

and

the beginning

1969)

185

their

“the

1252,

“6

issue taxi

finding

rendered..

transportation

of

The

protect import common

for

prohibiting

in

regime,

a

414,

525

were

Cob,

monopoly.”

jogging

state so

common it hearing.68

present Colorado’s considering

a

and

certificates 1254

industry

Licenses

own existence

competing

declared

long

governing P.24 ordinance

422,

that & of

governed

of

the

at

1963

carrier

(1977)

Public

public

carrier Reregulation

as

433,445

.. the 430, taxi

See

in

no

525

service

public

carrier

the

the

suits,

C.R.S.

of

in

common

parallel 1994,

Denver

Itt

to

as 525 was the

finding

P.2d certificate

authority may

taxi persons (by companies,

convenience

offered

accordance

by

of

existing

motor

1967,

Utilities major

health,

outergarrnets: (1974);

goes offered

authority

serving

parallel P.2d

a

changing

companies.

§

governed

an body

433,

statutory

115-9.2

be

it

Cleanup

1967

carriert

the

service

or

vehicle

at

adequate

was of was

so

was

446 revoked

safety,

Section

a

property.” in

451. cities.

legislative

Colorado

statutory opera

with

par. public

shirts,

and

far

the

Com

not

the

cited

obliged

(1974).

gov Col

provi

is

Serv.,

card to

was

law,

85 and

by

as

40-

be

hr

/ 86 Trazzsporration Law Journal [Vol. 24:73 and satisfactory service by motor carriers already in the area is .anegation of public need and demand for added service by another 73carrier.” The Colorado Supreme Court held that while inadequacy of existing services may be considered by the PUC in a “regulated competition” en vironment, it is no longer the controlling criterion that it had been in a “regulated monopoly” 74regime. Under the “regulated competition” standard, the controlling criterion is the “public interest” or the “public 75need.” In its seminal decision of C.M. Morey v. Public Utilities Commis 76.cjri [Morey Ii], the Colorado Supreme Court observed that the consid eration of the public need for safe, adequate, dependable, efficient and reasonably priced transportation services warrants an evaluation of the impact that potential new entry may have in creating excessive or de structive competition.” In assessing new entry proposals for taxi service in Colorado, the issue of destructive competition is at the heart of an assessment of the public’s interest in avoiding impaired transportation services or higher rates. Neither can “regulated competition” reasonably be interpreted as supporting imlimited 78entry.

73. Ephriam Freightways, Inc. v. Pub. Util. Cornrn’n, 151 Cob. 596, 380 P.2d 228 (Cob. 1963); Cob. Transp. Co. v. Pub. Ut!!. Comm’n, 158 Cob. 136, 143,405 P.2d 682, 686 (1965) (tani company seeking to provide bus service failed to prove inadequacy in existing services). 74. Miller Bros., Inc. v. Pub. Util. Comm’n, 185 Cob. 414, 431-32, 525 P.2d 433, 451 (1974); C.M. Morey v. Pub. Util. Comm’n, 196 Cob. 153. 156. 582 P2d 685, 687 (1978). 75. C.M.Morcy, 196 CoIn, at 157-58, 582 P.2d at 688; C.M. Morey v. Pub. !Jtil. Cornm’n, 629 P.2.d 1061, 1065 (Cole. 1981) (hereinafter Marcy H). In assessing the evidence, the public need is broader than the individual needs or preferences of an applicant’s customers. In deter mining whether a public need exists, the PUC may consider the needs and preferences of the witnesses who testify in favor of the applicant, although they are not dctcrminative. Morey II, 629 P.2d 1061, 1066 (CaIn. 1981). The public need consists of the needs of the public as a whole. Id. at 1067. 76. Morey II, 629 P.2d 1061, (Cob. 1981). 77. The court held: As a corollary of our holding that the “public need” is broader than the individual needs and preferences of an applicant’s customers, we agree than the Commission may consider the impact additional competition may have, not only on the conflicting eco nomic interests of competing carriers, but also on the ability of existing carriers so pro vide their customers and the public generally with safe, efficient and economical transportation services. The obligation to safeguard the general public against the im paired services andfor higher rates accompanying destructive or excessive competition is at the heart of the policy of regulated competition. Id. at 1066 [citations omitted). “Because of this obligation, the PUC can require a carrier to serve unprothable routes that are important to certain segments of the population as a condition of granting it authority to operate more lucrative routes.” Durango Transp., Inc. v. Durango, 786 P..2d428, 431 (Cob. Cr. App. 1989). 78. In Morey II, the Colorado Supreme Court affirmed the PUC. which denied a new appli cation on the basis of evidence which established that • The market for transportation services in the affected areas was relatively inelastic; • The operating capacities of existing common carriers were underutilized; • The operating revenues of existing earners were bo and 1996] Taxi Industry Regulation, Deregulation & Reregulation 87

IV, THE ECONOMIC CHARACrERISTICS OF THE TAXI INDUSTRY A. INDUsmY SIzE & SmucrUE

Taxicab companies comprise a $6.5 billion industry employing nearly 300,000 79people, of whom 225,000 are 80drivers. It has been estimated that the taxicab industry transports more passengers than all U.S. mass transportation systems combined. The taxi industry is8a common carrier form of urban transportation, differing from its mass transit’ rivals in that it is privately owned, operates over public streets on no fixed routes, and provides door-to-door (or point-to-point) service in small vehicles on behaif of, and at the direction of, individual or very small numbers of patrons. Typically, the contract between the driver and passenger is informal and ad hoc. Where regu lated, the price is usually based on the distance (and sometimes the dura

Additional competition for present and prospective business would seriously impair the ability of existing carriers to continue to provide efficient and economical service to the public. Morcy II, 629 P.2d at 1066. Thc Colorado Supreme Court subsequently reaffirmed each of these principles. In nans Western Express, Ltd. v. Pub. Util. Comm’n, 877 P2d 350 (Cob. 1994), the Supreme Court concluded that the entry standard of “regulated competition” is to be applied as follows 1. Under the doctrine of regulated competition, the controlling consideration is the “public need” or the “public interest.” .TLat 353; 2. The burden of proof in establishing public need is on the applicant. IS; 3. The public need is broader than the individual needs and preferences of an appli cant’s customers, and consists of the needs of the public as a whoic. Id. at 354; 4. The public need is advanced by “safe, efficient, and economical transportation serv ices.” Id.; 5. The PVC may consider the adequacy or inadequacy of existing services in deter mining the public need. IS; 6. The Cam_missionmay consider the impact of additional competition on the ceo narnic health of existing carriers, as well as their ability to provide the public with sale, efficient and economical service. Id.; 7. “Providing for the public need and regulating competition demands that some rc• straints be placed upon inter-carrier competition therefore avoiding destructive compe tition.” Id. at 353, n.7 citing Marcy if. 629 P.2d 1061, 1066; 8. “The doctrine of regulated competition requires the PVC to deny an application for common-carrier authority if granting the application would create ‘excessive’ or ‘destructive’ competition.” IS at 353; and 9. “Regulated conietition is not synonymous with deregulation.” IS at 354 clung Morey II 629 P2d at 1066-67. 79. See Roy SANYSON, a ,, Do.qjesnc TJ,.ANSPO8TAflO TIEORY, AND PoLrcY 150 (6th ed. 1990). 80. ENO TRANSPORTATION Four.crIoN, TRANSPORTAI-ZON n AMERICA 62 (12th ed. 1994). 81. Roscnbloom, supra note 13. 82. Roger Teal, Taxis As Public Transit, PKocxlsDxNos o tsm Co rtca ON T*jas As ?uar.xc Th.&i’isrr3 (Univ. of California, 1978); County of San Diego Dep’t of Transp., So 6 (1978). See Roy S’.).p’sbN, M’.p.TrNF.iuus & DAVtD Scocic, D0MESTZC Tts. PORrATE0N; Pcrzca, TiceORy, AND Pouc 150 (6th ed. 1990).

/ 2.

marketing, 3. ment is ciently ties.86 to cab them. der within are destination service.89 tral .7. tion) which trated summoned typically A See facilities, access 88 are 150 a

high

Rejoinder,

nip likely

afro 90. 87. 88. 89. &6. thought 84. 85. 83.

(‘Whcn

Radio-DL-patched

typically

Cruising The business

dispatching

The The The

market Cabstands

to

requests

of of

Teal

Teal FRANKENA FR.rixiA hi Id. Kemp, Chanoch Kemp,

locations

It a

pedestrians

density

Economies

significant personnel

Large

to

designated

Cabstand

taxi radio operate is at

the cruising

the

be

revenue, &

&

15

be

39.

profitable

by dispatching,

designated

Bergiund,

‘economies .rupra rupra

than

Bergiund,

3.

does accounts Cabs.

larger

industry

industry

fleet

Shreiber. ride.83

relatively

T,r’sp. radio.

of

dispatched and econDrmeS

exist &

&

are

such

system

note note

and

?.t.rrt.ER, potential over PAUThER,

cab

not a

BiLsiness.

of

to

many

congregate,

fleet sxpra service

and

supra

with

hence

4.

4,

of

The

EcoN.

only as

scale

Airport Transportation

provide

business

may

work Cabs thed

due

at

Taxis

scope’.”). by

for

large

of

whereby

small

and

concentrated.ea

airports

note

have

Economic

57.

note

supra

queues

supra

profit,

scale.

portion the

in

&

riders

territory.

have

be

to

70%-80%

enough

routes

4, management, well

ñnns

are

Poi’y

4,

downtown

at note patron. centralized

note

indivisibilities divided

vans

First,

adequate is

at

consists

49

searching

equipped

been

serving considered and

for Reasa,r in 38. patrons

exists

to

9,

81, (“Costs

of

9,

while

they

cities

at

provide

at and

both

82

the

hotels.

Law

54-55;

acknowledged

1142. into

the of

are Thus,

(1981).

for

at

of

urban

for

In

taxicabs

taxicab

service

limousines

call

with

taxis

more . same

maintenance

with

responsive the

as

random Pdce

for

Journal .

Gu.azR taxis

a

most several .

new

well this

it

of

by

likely

area

low

areas a

appears and overall

and two-way

entrant

the

driving

industry

cities, telephone

within

random

segment

proceed

as

& independent

Entry

city-wide to

locations;

density distinct

passengers

S’.i.iuais,

inputs

of the

be

differ

to

that

include

the Regularion able demand

large

and

radios,

exist

reasonable

along need

larger

involves

patron

of

service

directly

to populations.90

segments:

telephone

and in

employed radio

supra repair

of

the

respond

cities

the

in

for

[Vol.

finns

each

at

streets

that

and

where of

cabs

this

equipment,

industry for

note

concen

cruising

to a

Taxicabs:

other.”).

a

do where to

facili

quickly

24:73 fleets

suffi

time

they

cen

seg

10.

there

taxi

bail

have

the are

or

on

in

at -

4. 1996]

one

license, industry gasoline, nance, purchase ing permit oil distance, ments of segments passenger example, high the

ence of ney.95 community either

Public

density the (B) (A) erly, (C) (E) (D) vider these and of Sometimes

91.

92, The 93. 95. 94. and In

taxi

Many

probability

more or Taxi

paratransit feeder of traditional cost the brokerage the involvement

and

Teal Rosenboorn, fees. Sre to

!d. Gaflick

a labor. In for

are costs

will

and non-existence advertising two areas, duration revenue price Contract

down

of a

refuse Gaflick radio radio

the trip the each Industry costs

&

of

of

exceptionally

thrity-mile

from

services

return the

Bergiund, Variable a

equivalent &

of

taxi handicapped:

the a

or absence

couple

to of service.91

Sisk,

payment

services public iced services Labor & dispatch entry dispatching

of are journey.

service

late

which

nor over in

a a following and Sisk, Services. serviceY

returning

:sapra

to empty.94

user-side remote Regulation, fleet joint

costs, supra at

route

13.

fixed into of xupra costs

which destination agency

of of expenses passenger night,

matching for

there

note trips B.

to

segment quarts on

of

note modest,

costs, a regulation,

A

special transit the routes;

note

insurance,

a

paying

in 9. suburban subsidy services: equipment

automobiles, often a INDUSTRY

to with trip

will The

is 4, patron

contracts

cabstand

car,

9, the

at unlikely spread

of travelers spread

have Deregulation target or at

49. without differ

in of relationship trip consisting a

which

oil.

117-8.

industry program; four patron

paying demand-responsive

lieu

the

seeking a

community been

to groups driver

both

taxi and with over Cosm significantly

of

or

to to re-tread industry,

consume

a

dead depreciation, existing

be on cruising the

passenger,

and commercial

estimated personnel

driver .xed

are

principally

a

the such

transportation training, a

the

taxi between most

&

return

heading

generally

outbound

tires,

as fixed-route

and Reregulation fixed

has return

variable

company has

segments cost-effective

the

because

services

variable

white to trip to a

a

a costs poor, and

cost

of

regular

aiiport

high enjoys

strong

constitute run few leg

(or a a

rates

services;

and

a license to and the chauffeur’s in include function of to

of of

it,

gallons probability

thirty-mile to

costs.

provide

low-

pro the

the eld two a incentive the enjoys market inbound xnainte-

revenue charge of

remote

exist 50% fuel,

taxi jour 89

and seg the

For

of

of

a

a

1 price vehicle 90 deregulated) queue proportion ployed, 1. segments, driver mobile; vealed low sion provided Personal unemployed, 2. shares low the are

not do out-of-town ally

Ice.

101. 102. 103. 104.

97. 96. have 99. 98.

particularly

high-income The be Non-Residents.

mobility, The Where

income.98 The

at Hence

In

study much

wage for

Teal, Teal Id. FRJ..NICE.JA Se F See BARKaR See of

that as a

maintenance,

large

handicapped,

a Transportation

much 60%

market

at

to Transportation

their .N)CENA highly

supra

Teal,

“transportation

Gn..aar competitive each profitable

&

supra

higher,

(perhaps 220. profits concluded

taxis

58%

the

rates

Bergiund, business,

the

cities,

and retired

&

supra

note

income,

higher of

For

with

note

&

&

reliant transportation

Be.iz,

sensitive

principal

play population.”°° for

of

&

PAtJ-TLER, PAUTLER. lower are

13.

the are

on note

S’.i.ru.s,

82.

example, those

the

supra taxicab its

trips most) C.

and

or TransportatIon

an a already

price children convention

supra

alternative inadequate

82. that,

on

trips

and

Disadvantaged. per-mile own

market income

Study

incapacitated

essential

T

note

to the

at

at supra

supra who costs

the

disadvantaged”

note of

supra

often 14. than

the

cabsta.nds.96 services “the demand

purchase

were

4,

a

among

radio

PASSENGER

the

note disadvantaged. note revealed

used and

S. at which

price

1970

segments

also note basis,

taxicabs.’

at

49.

simply

in

low-income users or role (as

9. 9,

44.

low-income

made

dispatched

the taxis

10,

at

at

vacation

can

consists Law

characteristics: of study the

results

can

than

of

3. in 12.

individuaisY

at

form

taxicab of

that

more

be new

112. transporting lowest

regularly

be

of

Journal

MARKET

by

taxicab

is

include

of

divided

the

for trimmed

60%

of Business charged

of

equipment.

visitors.’03

population

dollars, housewives, A taxi

segment

service

persons.

rental

population?°’ in example,

a

Federal

of

service

substantial

the

did use

the

into

all

The

are elsewhere),

the

cars,

on

travelers

labor

not

since

in

of

taxi

elderly,

Trade

In several

These drivers’

taxis

where

disadvantaged, are However,

Pittsburgh spends

1975

the

own

although

students,

fact,

many

services force.97

[Vol.

persons

number

market.102

than

The

Commis

National

also an travelers

entry

distinct

a wages,

and

unem

higher

are

24:73

auto

large

poor

does

taxi usu

may

are

re

to

or on of

is

of

43,

SAI,epsolq,

tive

problems

price

tion

cruising

comparative

pensive

inconvenient

Eastern

ience.’° 6

cabs,

3.

their

1996]

111.

110.

109.

108.

107.

106.

105.

46.

little

In

concerned

legal

signed

it

customers

[The

made

at

from First,

market

Given

Another

Affluent

In

costs

The

puts

“Supply

Richard FTxA

GtLEsRT

GILEaRT

FRANKaNA

See

cab

the

company’s

can

and

Er

the

competition

cab

fares

the

parking,

cab

Taxi

space

BAJucER

to

United

lines..

head

to

drivers

AL..,

wealthy

with

these

In

to

enjoy

be

wait

queue cabstand

stand

for

A.

and them,

Zerbe,

market,

&

about

are

&

may

supra

shopping

Residents.

observed:

prospective

on

Industry

certain

way

of

SA.MUEIS,

&

&

SAJ.eu

competitive

problematic.’° 8

demand

while

& ta

.

in

the

unlikely

airport

practical

Trr

PAU-rLeP.,

PAtTrLER,

the market]

States,

vary,

when

a

Jr.,

the

especially

expense

BSARD,

note

are

a

costs...

to

on

large

line

sougcr

deterioration

services

Seattle

competitive

market,

a

s,siq,ra

travel.

personalized

the

V.

ABSENCE

densely

analysis

79,

not

or

hired.

prospective

supra

or

Regulation,

often by

to

supra

is

with

number

.cupra

at

when

supra

basis

hotel

difficulties,

Taxtr:

passengers

financially

a

MARKET accounts.’°

when

dicker

consumers.’° 7

150.

note

shopping

position

system

note

Second,

is

do

note

either

the

their

note

note

of

they

inapplicable stands

populated

Deregulation

10,

not

they

10,

in

OF

either

One

with

8

shopping

passenger

of

“first

9,

at

9,

at

quality that

are

at have

congested nature

than

A

there

151;

at

residents

at

exists

Deregulation

is

44;

IMPERFECnONS

do

152.

or

burdened

it

at

of

CopErnjvE

142.

usually

129.

quality

on

impedes

source

Gu.amvr

in,

not

Fwx

a

is

refuse

customers....

to

cabstands:

is

finding

also

Hits

exeuse

safe

cities,

not

the

In

first

or

no

goes

know

is

of

severely

a

or

occurs

cruising

impractical,

way

manner

can

both

find

the

a

Pothole,

price

at

streets

&

summarized

out”

shopping.’° 9

price.” 0

by

cab

local

SAMUEI_S,

&

particularly

accounts the

all

in

be

a

service

PATJrLER,

&

the

because the

competition,

which

that

taxicab

private

clear

rule

limited

MARKET.

in

Rao.

taxi

fares

Reregu!atioil

created.’ 1 ’

Moreover,

and

which

regular

cabstand,

seems

supra

one

severely

and

(Nov.-Dec.

and

market.

that

with

or

and

limited

supra

there

and

automobile

the

to

know cab

not

those

note

to

the-transac

a

cabs

use

because

puil its

the

nOte

airport

can

can

be

competi

The

much

practical

10,

As

restricts

and

that

conven

1983), and

not

out

of

as

be

9,

lowest

be

in

at

condi

at

one

taxi

111;

the

51.

the

ex

at

an 91 92 Tran.sponarlon Law Journal [Vol. 24:73

source observed, “It is not certain . . . that a ‘market’ in the pure eco nomic sense even exists.” Moreover, visitors from other cities may be unaware of the prevailing2 price for taxicab services, or whether the pas senger is protected from exorbitant pricing by a regulatory authority.” Absence of a competitive market exists not only at cabstands, but in the cruising market as well. Competition in the cruising market is un likely unless a number of taxis congregate in a single location at the same time the patron is present.” One commentator lamented the absence of a traditional competitive4 market in the taxi business, noting that time is of the essence in the procurement of taxi services:

Commuters a]most always grab the first cab that drives by, as opposed to shopping for a taxi like, say, a restaurant, where the choices are a.rrayed and where the business with the best or most efficient service wins. All of which means that the fruits of a free market—namely that competition al lows the best to thrive and prompts the worst to go broke—are lost. Ulti mately, deregulation in the cab industry provides an incentive for all involved to offer the cheapest service a1iowable.’ The spatial nature of the industry5 inhibits price shopping, thereby creating somewhat inelastic demand.” Professor Chanoch Shreiber put it best: 6 Unlike other atomistic markets, a taxicab market in which cruising is the main method of operation will seldom give rise to pricing competition. In most industries sellers are at a fixed location, and customers have the ability to shop around for price and return to the seller offering the best terms. A seller can thus, by reducing his price expect to gain more business, since some customers shopping for price will switch to him from his comperi tors. Not so in the case of taxicabs. An individual cab operator, acting inde pendently, cannot gain more passengers if he alone reduces his price below the going market 117rate. Professor Shreiber goes on to point out that because a prospective

tions for reachingequilibrium,specied in supplyand demand analysis,cannot existin the case of taxicabs, and the point of interaction between the supply and demand for taxicabridesis not an equilibriumposition.” Shreiber, supra note 90. at 298. 112. GELEERT & SAMUELS,supra note 10,at 151. 113. FRANRtNA & PA.TTLER, supra note 9, at 50. 114. James Foerster & Gorman Gilbert, Taxicab Deregularion. Economic Cotsequences and Regulatory Choices, 8 Tx.j’sp. 371, 383 (1979). 115. Christopher Georges. D.C’S Checkered Cabs: Why Washington’s TaxisAre America’s Wort, WASHZNGT0NPosr, Mar. 21, 1993, at Cl, (2. 116. Richard Coffman, The Economic Reasons for Price and Enrrj Regulation of Taxicabs:A Comment, 93. Tsp. EcoN. & Poi’y 288 (1975); David Williams, Information and Price Dc termination in Taxi Markets, 20 Q. Rzv. EcON. & Bus. 36, 37 (1981). 117. Chanoch Shreiber, The Economic R€a.sonsfor Price and E,wy Regulation of Taxicabs,9 3. T&tsp. ECON. & PoCy 268, 270 (1975). 1996] TaxI Industry Regulation, Deregulation & Reregulation 93 passenger who values his or her time will not likely turn down the first available cab on the basis of price, this will have an “upward pressure on the price.” A consumer bailing a cab from a sidewalk has an incentive to take8 the first taxi encountered, because both the waiting time for the next cab and its price are unknown.” Paradoxically, in an open entry regime, prices tend to rise while9 vehicular utilization rates tend to 20fall.’ Potential patrons for whom price is a determinative factor, but time is not, may take the bus, subway, or some other form of public transport, where and when it is available. However, little cross-elasticity of demand appears to exist between the taxicab and mass transit industries, for most taxi demand is time 2sensitive.’ B. IMPERFECT’ INFORMATION & TRANSACTIONS Cosrs. The free market competitive modeLassumes consumers have “per fect information.” Yet consumers buying taxi service in a dereguiated market often have little comparative pricing or service information, for the opportunity costs of acquiring it are high. As one source observed, “there is little incentive for price comparison for the occasional taxi user, as transaction costs (in time and effort) are high in relation to the poten tial savings (less than $1 for a $5 to $6 trip).” It is, quite simply, difficult for a consumer to assess the quality of transportation erv ce at the time it is ordered, for transportation is in the nature of a “credence good”—one that cannot be examined prior to con sumption.’ A prospective patron can tell something about a taxi visu 2ally by the make and model of the automobile, as well as its dents, scrapes’ and paint job. But not until s/he enters the taxi will s/he know how long the trip will take or how circuitous the trip will be, how smooth and comfortable the ride will be, how knowledgeable and courteous the driver may be, and whether tle price will be a fair one. The efficient acquisition by consumers of useful information on pric ing is problematic in the cab stand and cruising markets, for reasons ex plained above. Comparative shopping on the basis of price is difficult even if fares are posted because of the number of variables which com prise the total price—drop, mileage, wait time, baggage, and additional passenger charges. Economist Alfred Kahn has observed several problems emerging from destnictive competition, including consumers having a “limited abil

118. id. at 271. 119. Thai & Bergiond. supro note 4, at 38. 120. Foerster & Gilbert, supra note 114, at 378. 121. Shreiber, sup to note 90, at 82. 122. Teal & Bergltmd, supra note 4, at 50. 123. DEMI’5EI’ & GoErz. .vupra note 2. at 276. 94 Tran$portatiozz Law Journal [Vol. 24:73 ity to judge the quality of products and hence to keep it at acceptable levels even when they have a wide range of competitive suppliers to choose 24from.”’ Given that comparative, shopping by patrons for the best price/service combination is severely circumscribed by the absence of a true competitive market, regulation of prices and services can signifi cantly reduce consumer transactions costs, thereby increasing the number and variety of taxi 25trips.’

C. ExrEru.i_rnEs. An external effect of a transaction is the positive or negative impact upon a person not a party to 26it.’ The negative externalities of taxicab service are felt by other users of finite road and highway resources, and the environment. Again, Professor Shreiber observes that “[t]axicabs im pose various external costs. Mainly, they increase traffic congestion and — raise the level of air pollution.... The price of a ride in a system of free entry will cover only the private cost. The social cost per ride, which includes the externalities, will necessarily exceed the 27price.” It has been argued that restrictions on entry increase efficiency by reducing the street congestion and air pollution caused by an excessive number of vehicles. Garrett Hardin, in his powerful essay, “The Trag edy of the Commons,” provides insight as to the economic forces leading a rational wealth maximizer to advance his own economic interests by externalizing his costs: Picture a pasture open to all. It is to be expected that each herdsman will try to keep as many cattle as possible on the commons. Such an ar rangement may work reasonably satisfactorily for centuries because tribal wars, poaching, and disease keep the numbers of both man and beast well below the carrying capacity of the land. Finally, however, comes the day of reckoning, that is, the day when the long-desired goal of social stability be comes a reality. At this point, the inherent logic of the commons remorse lesslygenerates tragedy. As a rational being, each herdsman seeksto maximize his gain. Explicitlyor implicitly,more or less cd>nsciously,he asks, “What is the utility to me of adding one more ncrnl to my herd?” This utility has one negativeand one positive component. (1) The positive component is a function of the increment of one animal.

124. ALFREDK..J*4, II EcoNoMIcs OF REGULATION 176 (1971). 125. Gallick & Sisk, supra note 9, at 117,119, 127. 126. Dempsey, supra note 3, at 17. 127. Shreiber, .rupra note 117, at 274. 128, See FRANILENA & PAUTLR, supra note 9, at 38, 42 (“[TJhe operation of taxicabs on congested streets slows down other road users, increasing their time and money costs of travel.”). Id at 38. 1996] TaxI Industry Regulation, Deregulation & Reregulation 95

Since the herdsman receives all the proceeds from the sale of the additional animal, the positive utility is nearly +1.

(2) The negative component is a function of the additional over-grazing cre ated by one more animal. Since, however, the effects of overgrazing are shared by all the herdsmen, the negative utility for any particular decision- making herdsman is only a fraction of 1. Adding together the component partial utilities, the rational herdsman con cludes that the only sensible course for him to pursue is to add another animal to his herd, And another,,,. [b]ut that is the conclusion reached by each and every rational herdsman sharing a commons. Therein lies the trag edy. Each man is locked into a system that compels him to increase his herd without limit — in a world that is limited. Ruin is the destination toward which all men rush, each pursuing his own best interest in a society that believes in the freedoms of the commons. Freedornin a commons brings ruin to 9all.’ In an environment of excessive competition created by excessively liberalized entry, the city streets are commons, the taxi companies are herdsmen, and the taxis themselves are cattle. Every additional taxi on the street brings the taxi company additional revenue (particularly where driver leasing creates an intermediate market between the taxi ftrm and its customers),’ although average taxi revenue will fall for all taxis as the streets become congested with more vehicles than necessary to meet aggregate3 passenger demand. each individual taxi company has ° Since an incentive to increase the size of its fleet beyond the collectively rational level, according to Hardin, “[rJuin is the destination toward which all men rush, each pursuing his own best interest in a freedom that believes in the freedoms of the commons.” As we shall see3 in greater detail below, excessive taxicab entry has a negative impact in ternis of industry productivity and profitability. But Hardin’s main thesis’ is berdsmen, not about the economic decline of but of the negative externality of another sort — pollution. He says: In a reverseway,the tragedyof the commonsreappears in problems of pol lution. Here it is not a questionof taking something out of the commons, - but of putting somethingin.... The calculationsof utility are much the same as before. . . . Since this is true for everyone, we are locked into a systemof ‘foulingour own nests,’ so long aswe behave onlyas independent, rational, 32free-enterprisers.’ The pollution impact of allowing an excesive number of underutil ized automobiles on the streets for any environmentally conscious corn-

129. Garrett Hardin, The Tragedy ofthe Commors, ScraNcE,Dcc, 13,1968,at 1243. 130. See Teal & Bergiund, supra note 4, at 54. 131. See Hardin,.rupranote 129. 132. id.

I 96 property munity fected territory nor moiiizing” the first city’s eers, a and viewing cross-subsidization affluent and upon observed,

required nance, out high-peak to cabstands. service. Low-density

significant

133. 134.

136. 135. 137.

all

tragedy

will

services. pricing verely Still in that Further, efficient and business

Most

Unlimited

and

image,

if

on

some

by

See Gn.SERT

See U.S. that G11nsRT

is

designed When taxi

newcomers

a passengers last with rights,

an another

to

manifest,

businessmen. generally, poor limit GaWck

taxi the

Dnr’t governmental “[c]ross-subsidization,

high-density

licensed provide

cities is As discrimination

“average and

The regulatoiy

social

D.

impression for

on-demand non-discriminatory

traffic,

gypsy, an by

& &

the commons.

company

one

or for or

o &

SAMUEL.S,

S

possibility impoverished

has the

excessive

ascribing

to externality

CROSS-SUBSIDIES

Dempsey,

profits

Sisk,

would

excessive Ti.,’j.isp.,

highly

objective

no

by Hardin VEXs,

source service

or

validated taxis

meet

or economy are

cost” Transportation

supra

rational

unlicensed,

more

issues,

supra more

that upra focus

a

traffic, A

dependent

taxi

flood operate

authorities priced

of

supra

supra

some Licensing

city

private

(i.e., noted: number

note further

city’s basis). to

opening licensed

entry

of

involves note these

note affluent

on

service.’34

low-density

the

areas; will of remote

herdsman

note

note

the

9,

assuring

predominantly the public

these

pricing

transportation

10.

taxis at

hotels,

10. a

as

‘

per U.S.

fears.’37

property

causes

points 3.

4. make

117.

city streets of

at

A2W entry carriers

same at

“common upon

is

peak at

Law

Thus,

insist,

153; more

siphon the patrons

153-4. vehicles.’33

se,

Department

17-21. policy one communities,

as

based

reasonably

restaurants,

will

See to Ci.i on

out

owner-operators

impact

distance-based areas

traffic ubiquitous,

is Journal

a

iucradve within

need

mechanism

a dense

rights,

generally

by

visiting

business

whole

taxi overgraze

not that

objectives.”35

on carriers.” or

or regulation services.

to

at

cross-subsidizes

market

taxi SKIMMING.

average

markets dense his one automatically

sustain

at

or

areas,

the

may

Suzuki,

of

priced

tourists,

and

nonpeak

airport,

in in certificated

service

Transportation reasonably means

for

airport laud

also

effect, profits

be

and

markets.

That effect

other

fare

supra The

costs

cross-subsidize

service

to

or creating

adversely

raises

which

experience

convetio..

of

has

convention

gravitate

[Vol.

is, times be

note

required

local taxi

they

“de-com..

and

can

requirisg

avoiding

frowned

taxis

off-peak

charged

fears

upon

service

priced,

20,

to

In

is is

se

24:73

serve

with such

hotel

ordi

at

his,

less

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are

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129.

to

a can company vice, pany Professor company’s would comparative nificantly Yet note thereby chauffeur’s business. dispatch ing, time costs.” tends space search ownçr-operator ti.uaity others 1996]

138. 139.

subsidies These may inter-temporal 9,

able

the

easily

accounting,

And, Economies Deregulation Given Absent

performed and

sensitive,

at

which

Id. and

to

Foerster

“Given

costs.

not decrease

118;

Persons Taxi

per

no results.138

injuring

F. at

market,

put

results

one-stop

can

enhances

Shreiber

park time.

as

expect 119.

longer

“(R]egulation

fleet

passenger

the license

now

dedicates

that

Ti Industry

shopping.’39

regulation,

noted

&

too

by

easily

with

economic

Gilbert. might

temporarily

in

riders

of

exist grows. minuscule

and Professor

E.

the

cruising

cross-subsidization.

the be

for

many

ABSENCE there

price, results

scope

shopping,

and observed: a

able

demand the

above,

dedicate cab

without

occur and

economic EcoNo1.nEs

low

passengers

can supra

Regulation,

overhead

its

An marketability a to

to drivers

taxis

with

maintenance

increase

are

ability

few

regulation and primary

down

in

because

use James

note by

be

given economic

idle

ability

income

OF

also some

reducing riders

would the on capacity taxi

economies

economic

cabstand

114.

to health

the Sour

costs

payment

cabs

Foerster

thereby

the present

there

cost

service. pay,

OF

that .

number at is business

to Deregulation transfers tend

trips .

generally 385. .

can

SCALE

in

roads

provide

of

of

but generally of

The

barriers

will of customers’

to

demand to

EcoNOMIC

hotel

marketing,

becoming

markets

be

service

the and

reduce

of

existing in enjoy

barriers

a

on the and

no

elimination

could

exemely

high

to

when the

scale

variety for

AND

longer

flrth’s

car,

and

ubiquitous

express

Gorman

the

immediate

to

for taxicab shorter need

decline

lead

no

the

&

in

SCOPE

firms

transaction — of

they An airport

radio-dispatch be entry, impede

costly.”

very

C0NDm0Ns. product

longer

taxi Reregulation

advertising,

taxi

the

to

of for

transaction

any

all

document

open

socially

Gilbert tiips

whatever

industry.

are and

waits,

as

transportation. service,

taxicab

- services

expensive

geographic

GalLick service

one

queues. one

averaged

the

by

least entry

in

their

entry

reducing

undesir and

needs

better

size

the

intuitively the

observed:

&

dispatch cross-

industry.

also

costs is

S1sk, delivery

needed,

A

drivers.

aggregate market

regime oppor

in

A

radio-

or

of

while

often

com

over

search

supia

is

ser

taxi

sig

the

the

97

of

a 98

have

pirical characteristics tion time Sjostrom ory that insight of way market viduai ment) are enter the the and

William Loois’rtcs Arrriws-r

141. 140.

143. 142.

transport 144.

vary In The operation is prosperity). supply a make and cline sion income

players emerged those Thus, Professor infamous

Professors

competition confirm,

Game

therefore one because

car

an required

the

based

can testing.’42 Timothy Williams, Shreiber, Richard

See Sjostrom, needs.

a

disadvantage

into in

because

sharply

environments that

inverse

cab

& smaller

would absence

of of

the

Buz..

RoBaaT in the stability

communicate

Ta’jsp.

theory

cabs

is

the can the

the

driving

are on

opposite

to

which

the

from

rather Coffman,

Smith,

simply “prisoner’s

supra supply

supra Sh.reiber

of in Moreover,

Anwrza any Players

19 of

be

Lester be natural

when supply University individual expect

question relationship

subject of

just times

Aoo,

competitive

(1993);

the ffi

for a Yet,

R.Ev.

used

is

legal

game of note decisions their

note

cab

Why

the

than

direction

there

decrease these broken

supra a

Tiansportarion

isn’t

such of

taxicab

of

Immumry of

207 — occupation

as

make Telser as by-product. driver,

117.

William 5, under

Air

wrote

players restrictions,

permanent

labor

to recession.

cabs

and cyclical

a

at theory,

of

reject, we (1992). cooperative, is

dilemma”) Ti

drivers, fluctuations note

possible

cab.

needs;

at

7rai

College

36. core

less

why

with in to 275-76. down

made when and form

shalt

decisions

model

industry

EvoLt.rrzoN

Sjostrom, of

neo-classical

for

116,

his and

demand general The

demand.’4°

fluctuations (buyers

Doern’:

to

theory,

Professor

not

the who and

Shipping the

Restrictions

pragmatic job at

the any

the the

coalitions see, equipment turn

into in absence

Cork are

290. In

much

was is

Law University

will players taxicab —

as

some

level demand business number Price

large-scale for

non-cooperative that in

Work, and

to

the

not

as

OF

two

their

which and we

Conferencer: not

anyway have

them for money

1975.

Journal COOPERATh)N

to of

Discriminatior,

they

Shreiber’s will

empirical

economic non-cooperative. based of

industries.

Fowrtmia,

shall

general

are

assessment those barriers

so rejected

sellers income

market of which

for conditions. are

by

economic (i.e.,

argued

“really tend will

cabs is

as

needed

suffer

He

of

them

the unable

see,

needed

benefit that

on

in

to

bring

Ar

Chicago

to

to will most

coalition in was

Apr. types

times

best industry

fails results mutuality.144

in theory. on rises analysis.

are

that (1984). offers

Empty entry

by

amounts hurt to

a

..

“games,” necessarily Very

times about

to of

3. activity.14’

probably criticized to the Shipping market provide

unemployed.

which

of

meet

.“‘

to

(in

of

1995, various buy

the

makes those

communicate,

recession)

Core

little

a and of

basis

perform

of

“games”,

they times

The [Vol. a

appears

fascinating or

at

economic 1argr

their Core dereguia

reces

to

some arises

Appraat.h,

Confcrcncj,

rent

who skill

environ

William 41, will

(such cab

de

of

former modes

saying of should at

24:73

46;

mdi

em the

the

the

for

to

or See

as

8 1996] TaxI Industry Regulation, Deregulation & Reregulafion 99

Core theory is a subset of cooperative game theory; a core is formed when the coalitions are aligned in such a way that no player can advance his needs by defecting to another coalition or operate on his own. By contrast, an empty core arises when players can continuously form new coalitions which bring better players. Whether a core exists or not de pends on the number of players in the game, and the market environ ment, or rules of the game. Several economists have described various alternatives for which a taxi trip reflects an empty 145core. Professor John Shepard Wiley, Jr., proffers an illustration of a market with an empty core: For example, say that three strangers are willing to pay up to $7 each for a cab to the airport. Two cabs stop nearby. Each cab can carry one or two passengers, and each driver is willing to make the trip (with either one or two passengers) for a n,immum of $6. Given these demands and costs, the worst-off or excluded player can block any arrangement by tempting some players to abandon others for a more attractive arrangement. Suppose, for instance passengers A and B force driver X down to her minimum $6 total fare, thus yielding for A and B a fare of $3 each. As a result, passenger C is stuck paying at least $6 to travel alone with driver Y. But driver X could gain an added $2 by dumping B arid offering C a ride for $5—which C should accept because a $5fare is cheaper than a $6 fare. This new coalition between X, A and C however, is vulnerable in turn to raiding by the ex cluded players, Y and B. Now passenger B faces a trip alone with driver Y at a fare of at least $6, and both will improve their lots if they attract passen ger C with a $4 fare offer, which Y arid B split between themselves and which C will prefer to the $5 that C pays as a member of the existing X-A-C coalition. This coalition instability occurs for every possible combination of 146players. As Professor Abagail McWilliams points out, an empty core exists when each and every coalition can be outbid by a rival coalition, so that the market cannot achieve stability; quantity and price fluctuate con 147stantly. With an empty core, the market finds itself mired in unsatis factory results, unable to achieve competitive equilibrium. Another source summarized this illustration of dysfunctional economics more succinctly

Imagine, for instance, a market in which a taxi holds two people, and oniy two. Three people are waiting at a taxi stand, bound for the sane destina tion, and two taxis show up. How much does it costs a taxi to make the trip

145. See e.g., George Bittlingmayer£ecreasing Average Cost and Cornpethion A New Look at the Addyston Pipe Care, 25 J.L..& ECON. 57, 81-82 (1983). 146. John Shepard Wilcy,Jr., An:ürust and Core Theory, 54 1.1.Cia. L. Rzv. 556, 560-61 (1987). 147. See Abagail McWilliams, Rethinking Horizontal Market Rerrricrions: in Defer’se of Co operation in Empty Core Markers, Q. R.v. EcON.& Bus. 3 (1990).

/ 100

mand ftxed demand; store The istics

sion allowed petition lize

(and, nents deregulated of make doesn’t pay $20, 1978); ment, rion Aay can senger), taxis.14a

Edmund LAws U.S.

Professor

U.S.

148. 149. remedy 150. what

along Of would capacities; the

including, Unfortunately, is that Ensure Ensure Prevent be but Corn Avøid Protect VI.

Opponents price Unfairly Increase Raise indeed, DOT CorE’rmoR, the and DOT to undercutting

course, uncertain Smith, to LEs’rsR upset Some has depend product.’49 (3)

that

much. pewiari, Kitch, such

cascading Munarn. same

producers a

destaictive

opponents Bxpoi..jt be agreement regulatory taxicab Uaa the

URBAs mass

traffic been advanced more plants

passenger proponents supra limit taxicab Telser by has

et financial Tai.s antithetical

a any

amount of

a (5) So on

as and transit a

a].,

change

congestion; long-recognized regulation owners cornperidon slightly

MA.sS economic M.’.ss or note become the Cou.usIoN satisfabtory the his noted there until The other Transportation fares; T.zac Efficiestcy, exhibit

costs. competition

found

much Several-modes in Vmws periodic; st,.ick

systems; responsibility second EcoNoc fare will

143, of number Reg*dadon of of by

TRAsS?. TR.ANSI’.

a these

it

in better regulation revenue

satisfactory deregulated are mode Telser likely have from at for

is

to

highly RzouIoN six regulatory by of increasinj

and 45-46. 28 driver regulation

and ON no

avoidable two markets, contemporary of among ADMZN.. a argued An,uN., 3.L offer the

axis. prerequisites Txoa (2) take of

the Gj.s longer coalition of by REQtJLAON passengers. is of

passengers.

of Taxicabs

uies &

ideological alternative income; political plant taxicab that transportation) offering from Law have a

taxi

EcoH. hypotheticals. that of

bus supra,

TtzoRy

Tt’ca entry 32

profitable to .si, policy although returns

transport owners

fixed urged some which these the of in

(198). upset or Journal

owners capacities

271

A

Chicago,

at the T two

not

other One have debate You

1C,floN

limitations: 32. antitrust that (A)dine fox’ (1985);

costs; and would remedy measure

the third

and allows passengers travel

ANt Coaa to

to can taxi such carry taxi an operators; exhibit two first

143.1...

scale;

operate passenger

polarized. should unregulated and and over see are

D.1uouI.xrtoN empty at driver (University produce.’50 (or

controls o driver’s intra-industry

vastly the notions.

to

all,

Atherton. & of what

the tnn large (6)

these and destructive (4) EC0N. whether

market rather

cooperation

one can

be

other core:

Fst,r.a.i. it a are happens: different [Vol. arrange

one plants

fare

is relative of try regulated 285, of

character The necessary 1972); than

costly taxicabs. pas Chicago taxi

the (1) to to of 24:73 321-25

taxicabs

coilu. propo have A,enm,tJsr stabi

Coopera. com

de views

to

be to

to:

(1971). Press

or regulation 1996] vide grounds: source sumer and

alleged prices.’54 market theory the late-1970s, Professor free cab empirical number Er the also argue ZONA IN

CAB contrast, TION Pa.ice

ra

151.

153. 152. AL.,

154.

supply

neighborhoods; Produce Reduce Lower entry.’53 Create Rooca

Produce Reduce DERZGtJLATTON The provide Produce Result

real-world dereguiation, perfect tions Proponents

Most

better

(1989);

market

that

26

WA

USA

supra

demand,

of

“Students

F..NxzIA

Rosenblootn,

which

See,

Taxi

observed. that opponents

(1983);

emphasis

incentives

a of

taxicabs

the in

in

ERNOUSE,

Tae.i.

fares;

Roger Unfortunately, reality limitation 2 of

safety;

DEMPSEY of

e.g.. tancab less less note

service

government

and more markets

poorer insisting

(t986);

competition

deregulation a

Thdusü-y

these competitive

predictions

GILBERT has markets)

the

wider reliability.

accountàbility

PAUi. &

of

150,

and

in more thereby

& of

of

M.a,zy

taxi

placed

A$D service

economica Teal,

service; of

most driven supra RoGER supra

taxicab offered

P.trrt.EB,

on

deregulation “the

at innovations

& deregulation predictions

(and

DEMPSrv,

what

for variety service

285.

the Goerz.

& that

efficient

BEROLtJND, Regulation, proves

American

E-RCULATZON

costs

note at who

as

Suus,

by

TEAL, on

number fostering

argument

(“The

much

L

compared

productivity,

model

free of

and an as would: it industry

industrial and

government

supra

13.

the

and

supra

by

has

T

of more actually

we

what

contend explanation

Er

urban

authors

cities

market distortions eliminating and services.”52 of

have

of price faster

.cupra

E

, note

written

have

SOCIAL. argued

note

described cabs

to

usefui

efficient deregulation

transportation

deregulation

as Deregulation 1.6

Up.a’.i.i _A.1I’m40 is

organization

would service

that

9, that

of

been

note 2;

response

can and

has

a

seen,

at

(1993);

this often

in

PAUL clear

&

which

deregulation than 75;

that efficiency)

extensively creates

only

which

10,

EcoNoac

produced: oversight search

TRANSPORTATION service for

article

THE

based

Pluca

lower resource

case

expansion

the

DeMPSEY, in at

Teal

simple

operate More

would

eliminating

made

times; the

IMPACTS

146.

monopoly frequently

micro-economic

of

principles

share

taxi

in

WATER.HOUSZ,

&

distortions of

onlree should

wide

unwise

options prices,

& otherwise

Bergiund.

will: of transportation

CONSEQUENCES

micro-economic

specifically,

to

profit

industry

the and

solely

on ET allocation.151

Reregulatlon

cr

pricing,

raise

to

divergence

AL.,

TAlac’.a

academic

government

cite

the

power

DEanGtn_nON

on

pricing produce, market

improve

poorly lower the

dictated

be will

supra

Supra

the

on

actual

subject

P..NAL.YStS

service

provided.”

price

fails which

limitation

always creates

L)EREOULATION

view.”)

note it ideological

flOtC

OF

textbooks.

and

served

consumer economic

and

has policy.

theory

cond.i since

to

between

DaRnGul_.

by service,

As and

4,

and

of

1.

thwart

reflect decrease o

entry

at

been in

Id.

con

Krrca, pro

on

taxi

one 101

T.xi. 39.

They

the

the

Mu.

the See

In

1 102

braced

ited part.’57 Before determine

sulted

Let moving try. employed driver’s

155.

157. 156. 155.

provide for dominant consumers itive taxi freemarket Unfortunately, market.’56 [M]ost

2.

4. 5. tal 3. 7. 6. 1.

Similarly, entry Yet us The

Deregulation

Because

A An A A An Little A analyzing

in: pollution; Tcal

Rosenbloom, Shreiber, U.S.

the

examine industry

1983, behavior

entry in license, we

significant

decline deterioration decline

experiences

increase

increase anticipated

VU.

will

the no

&

Dsp’?

unregulated

what

or

need

taxi

Bergiund,

are

useful

original].

some

Sandra no produce.

supra restrictions

of

private

the

to

in in

o markets involving often

EMPIRICAL

each

and

an

in

improvement

the in date

.wpra

not deregulation operational

driver increase

impacts

proponents

or highway

note examination

rates; economic

twenty-one

in supra

a

used,

interesting TransportatIon 10W

Rosenbloom, rely shows of of taxis

note

down

service;

217,

—

income; free

We

atomisric

these these

of

note

in

but .supra

TAXIcAB

cost telephone would on

13.

congestion,

simply

at

taxicab

few

new have

RESULTS efficiency

outcomes market

payment

275.

these in

4, the

and

of

results.

cities

note A.

explanations of

were of

at

adrninitrative of

eny;

cities empirical

producers

result

empirical 47

theoretical

don’t the

deregulation.

theoretical entry

6,

the orders

a

ENTRY

(titation

INDUSTRY position

reveal at energy

and did Law

correct benefits scholar

OF

on

deregulated

IlL

act

in

taxicab

not

into

productivity;

data

Op and

an

selling

increased Journal

for

omitted,

like

consumption results

materialize.

generalizations that

claimed

costs.

whose automobile),’58

in assumptions on

on

cabstands.’55

the

the

Simple

enuepreneurs

Errri regulatory

their to

this industry

taxicab

results

taxicab

and

which

completely-informed

taxicabs

earlier by

models

subject, entry

the

predictions

proponents.. The

and

observed

IN

King’s

deregulation we

of reform

business

of

has

environmen irony THE

into

literature

of

ideal

can in

in

what

deregulation concludes:

English compet

[Vol.

produced.

a

the is in

of whole

types

assess

free that

that

the the

unlim

(ie., 24:73

indus

spelling

em

re

re

or to

a produced 1996]

of vehicles deregalation.° an to

ports which who lengthy lished serve facilities which

sub-industries—a city’-wide the

TAXI ExpairaNczs

companies.”). (“[Ujochecked (1984); rnits ternational RBc0NTROL.

F.xxr4A at

taxis 159.

1,900

160. 161. average

43.

162.

163. - 164.

cab

Most in The

concentrated

guarantee

R.EQtJI.ATORY

hotels

ROGER

already selected has

companies

Pu

U.S. FixmA

Taxi

Ta.t.

Ta.i. See in

queues.’63

more

stands, in

and

cabstand Taxicab

a service.’

new

&

relatively active

Teal

AThANTAS Dap’r

1970.161

OF of sharp

WAThRLHOUSE,

& PAUTLER., Atlanta Fresno Indianapolis Tj.., Industry Phoenix Milwaukee Sacramento Seattle San & Spokane

and

owth

cities

personnel,

than

U.S. 23%

BEROLUND,

were

entrants

BER.GLtJND, &

Association). Diego

& and a

TaCAB ot’

Bergiund, In

service

airports.

ar increase before

Crrrxs to PAtrI-I.., patron

REVIStON

large

their

doubled,

market

A in

could Atlanta,

.‘x.., well

higher E,cpauca supra

a focus

Thus,

Regulation,

driver

the

small

and were Wrm

supra

supra U1AN taxis

number

Pi,GTs .rupra

increased

supra and served

if

note eventually

.tupra

deregulated

in

on

after

The ml UaaAN

the the entry quickly

from

TAXICAB

note note number need

independent

the

note which

at requires 9,

note the

T

OAKLAND

following

Wrri note

entry

deregulated driver at Bai’ORE

cab

prior

AISFOR?ATION

151, 153.

of

number

151, T costs

144. 502 700

300 302

409 110 approximately 4, 100 129 radio

not

70

9,

lead Deregulation

by Before

T..a deregulation: independent became at

at at

Opzi’ deregulated

stands

at

.3’$PORrATION

(1965) (1979) (1972) (1979) (1981) (1982) a (1978) (1980) (1979)

of

40.

8; 11.

is

to more chan invest

ANt)

144;

a

in

28. cities.’59

to

P AND

dispatch larger

willing REouZTzoN

sufficiently

See

dereguiation.’

EN

terms

of

M owner/operators

AFrER increased

.AThANsrr provides

at

aLto

taxi

Jurr1’ucxEoHs, than

new

BEaxEz.aY, saturated, DEREGULATION

in

hotels

companies

29(1983);

PA

a

to

oTffispatching

Or DEREGUt.AflOt1 industry

In

700

telephone in radio taxis owner-operators & 50%

data

wait

ar1wsrr

financial

SERvIcES,

I

Phoenix,

Reregulation

1965,

large

(1982)

and before

ENTRY

1,538

on

on

in

C’.1wO1A 466 351 425 230 915 168 dispatch at

forcing

U.S.

45

80 After

the

INC.,

divided airports, the

the ZN

the

(Prepared fleet Hotels

(1983) the (1983) (1974) focusing (1983) (1983) (1983) (1983) (1983) SzivzcEs, (1983)

difficulties

or

Daa”t number

INC.,

ARIZONA order

deregulation,

DECONTROl.

the first

ml road, increasingly

small

number

equipment,

to

supra the

AREZONA

system

OF

number

into

and

of market, 49 year

provide

for

venues

serving INC.,

on

rising estab 8(1983). firms,

taxi

for note

the

(1983) 103

air

two

THx the

AND of of

per

to

the

159, vu

In 104 telephone number finns rate.1 ability marketing eighteen airport

opportunities der Except ment and have owner-operator

costs dio

rate police tional Tacab Occupation

Sheriff-bailiff Police Gas Security Stock Bartender SupeMsor, Sales Logging Hotel Salesperson,

Salesperson, Butcher, Freflghter

Laura

165. 166. 167. 168. 169. 170.

171.

dispatch to among Because

station, Nonetheless,

little Deregulation

Institute counter

not

handler, emerged

officers

associated in and Clerk

Meckier,

Id. Id. Ta,c. Id. be Teal

The dxiver-chaffeur

(resulting

failed

guard

Ta..j.. in

For

rieatcutter

of

large

months

detective

at at at

affiliated

several

proprietor-sales self-employed.’69

capital.17°

Phoenix, order

garage

taxicab conditions, &

vehicles

other patrons),

28-29. 30.

9;

&

clerk

and

example,

for

bagger

Bergiund, k segment

the

Job T.i

Beioww,

during

for

BERGLUr.tD, taxi

Occupational

with

almost

professions.

worker

level,

market.’5

business, .

with RLsks

oversaturation

of

from

a

&

self-employment produced

firms, with

in

more

large Baci.amx,

an

supra

taxi

twenty

Inadequate the 40%

High TransportatIon

of

the

andlor the

again,

supra

entry however,

supra

more the the

Safety first so companies As

note

for

purchase

fully

than number

of

times

industry,

note

two

the

that Entering

relatively satiating

Cabbies,

note

the willing

4,

supra moratorium

fifteen

and

taxis

below

deregulated twenty-five

the

at does

151,

of

largest

new

151,

Number most

29; profitability

Health,

rate

note

of the

have of

at Rocx

by

chart

Ga2ERT

to

serving at have

Law

reflecting months

taxi

41.

potential

the

for

an

radio

8. small 151.

market of

accept

individuals

cab its

companies

of

140

shows,

115 372

183

firefighters.

oversaturated

36

37 86

95 20

companies

73 the

17 taxi Mm. 12

Homicides Journal nsks. at suffered

6 6

in

8

drivers

cabs.’7’

cities,

&

41.

equipment,

structural

the

of

San

S4UEIS, new

has

the subsistence

business

News, caused

the

According

entrants

deregulation.167

have

rate

same,

no

Diego,

also

ently

relatively

left a

with

July

the

is

serving

new very

supra

Kate

inadequate

almost

changes

is dissuaded the

highest

cabstand

9,

to

dispatch

or

has are minimum

1996,

one

taxi a

earnings per a

high

note

industry.168

report

third

four

a

the

higher .

been ignorant

100,000

homicide

[Vol.

227 at

of 10.7

companies

10, declining,

6.1 5.9 5.5 3.5

3.3

0.1 2.3 23

2.0 2.0 in

1.7 turnover 1.5 13

times

20A. Phoenix

by

market. the

at person-

Within

of

profit

invest

the

at

24:73

in

workers the

149.

skills

entry

that

victim

taxi

few

the

or

ra

Na.

of

of nel, 19%] wide -cause cities new try, dominate most predicted

taxi cance vidual virtually ket, for markets, for

even operators

fact,

Passenger This measured for

TION

151. any

third uiation..,. (the vehicle rupra than service.

172. 173. 174.

175. 176.

accurately passenger

marketing,

the The

Low

measure, entraizts example, industry,

service at

however,

difference Putting in

14

significant a

declining, for

most

capital

in is

note

operators 50% 16, Taxi

Teal

Id. provded Roomt P (1989). which

INT’L

fuJi-service

Sta.lians,

the robust not preventing

any

causing

27; entry the

to

at

151,

in

increase [TJhe

by

& demand

entire B.

deregulated the

Industry

where 40, nt.’j-srr

Tn.z,

Txrc.ka

result

at self-motivated requirements more have reflect.s

Bergiund, the

Th.a,r.,

industry,

represent at drop-offs. 34%

predicted entry

the

productivity

only 47.

so supra

and

number entry costs,

operator

all 1344. OpE1a.rno

impediments

industry,

cannot

market.’73 full-service

at

in

they number swarmed

Ai there

SeRVICES, from

85% lower taxis

in

surprising,

operators.

has

the a a Ms’N, note declined

supra Regulation,

of

In Ovxvisw

more

of Phoenix, an feet

number

as

although

supra

utilization 7, San quickly while been

by passenger new

of the cities effectively

deregulation: on may This

productivity

inherent

much

DoEs

at

note

the

to

INC.,

of deregulation

Diego, sufficiently

successful

5. the individual

note to

factor

the

EIcmNcY

companies firms

Phoenix

significantly of deregulated,

enter be

results

daily 4,

to service

have

TAXICAS o

upra

given

With dominate

37%

taxis,

number

of streets

at nips oversubscribe

151,

“economies

their

the nm

the

taxis Deregulation

characteristic 49. and

which

the

compete note

trips

taxi at but per number faced per

AMERXCA?4 in

in demand

the achievement

inevitably

by

of 13. outcome

DE market

can

entrepreneurs large

active deregulated each industry rarely a

day. 159, San

to

proponents,

operators

trips

per reduction

the

higher

in

is

the

stable

of abandon become

GtJLATZON

at

vehicle

In Diego,

taxi

probably

per the

in

vehicles 29, of to

cabstand cab

ExraIucE

for

has produces

Seattle, large

share

PRODUCrIVITY.

the

the scope.” per 33;

to shift provide

after declines &

deregulated

of

declined

prices

was

or taxi

or

Ta,i.

taxi

day

Reregularion of in

a telephone and airport

MAJca increased industry a has

incumbent

these

deregulation.”

deregulation declining has providing the has

taxi

into

totally

economies

has

consumer

service

of

markets.’73

deregulation.

decreased &

Wrm more 48% significantly

and ubiquitous

been

trips BERGLUND. declined

declined with SENsE?

greatest

operator.

markets

the

Thus,

and

by

are

Ta only

deregulated

deteriorating

cities, in

stagnant taxi 30%, patrons. many among per order

demand

firms produced

by

6

Seattle?76 by

minimal,

TLL, cabstand

76%

benefits in

of

Daa.xou.

(1984).

since

one-quarter

signifi as indus supra

shift.’75 about

while except

most

scope

falling city

more mdi

mar

105

still

as

the

Be- the

Et

dereg

much

more

note or

one

each

In

“By

as

4.L,, 106 levels

Professor revenue

the tion ity-enhancing

empty above, tate ing tive observed, tion

providers. industries

ity limited most which plummeted ductivity

line highway For queues: to

Tc.&a

industry,

for After

is

improvements Putting

177. toward 178. substitutes 180. 179. six 181. 182. 183. 184. That

may

of

example, Putting

and a

factor Given taxis

new

a

there

trips hours natural service

by Gou. Teal Id. Se Ta.at., Gn.BER’r, constant Id. MuL’ru’uc.’noNS, Teal

C.

SaRVtcE waits

source “When deregulation, congestion caused be

produces

entrants at

with

at the FR.ANXENA and the

more

&

stable

(although inputs per

52.

is service the HIGHWAY 13-14. largely

observed, more, er

were

Bergiund,

after of to deregulation consequence already

basic some

GILBERT, the

.‘.i, supra TO

went day

by transportation

few Damocles or three

the

taxis

in or RSENT1AL

reported.1 can supra tend length

more

Trarsportation Atlanta and iin1mited decreasing St

innovations

arid note

or coathied

economics urban play declining

supra deregulated EmONMENTAI.

on

PAU-rLBR.,

not

or

well INc.. to EFFECr

taxi. hardly “The

on

trips

CONGESTION, note not

17’7, emptier, wear

to

—no carbon four

of

enough note is

supra the

point served

productivity, produced.’” to 151, common at of Sword deregulated,

decline the per

driver Ais

OF

2. and supra entry). 4, to hours be have

an taxi number

corollary roads

demand a:

note Open

at of such

queues

shift,

monoxide, increased out 27.

reduced,” increase cabs modes

46. tear to

hotel

note 2(1984).

the Law demand,

radio

contained wages, 161,

in

were

Er.mw

offset that,

as carriage

merely

ENERGY

feU

on taxi 9,

on

industries of

at

Pou..urroN is

at shared-ride and Journal

at

300-400 exist,

measured dispatch

32,

the not benefits stable passengers?81

“Opportunities in by AND the

8. the

whIch, productivity

the

competition

37.

ozone, and

airport

the

increases

asphalt, at uncommon,

transportation

in taxi

streets the

The CONSUMPTION steep

or least

the number

taxis

federal inasmuch equipment

as

impacts

declining stands.’8°

to

by and one cabstands, taxi

lack

drop

we

one-third.178

it

not

lined

F’j’a. the

consumers

the

after bums

other variable within services)”79

As

shall of

of

for

Clean and

only in

of

number [Vol.

number

vehicles

as pr6ductiv- up one

and

ON

and deregula

driver productiv are As

more deregula

waits

& poUutants, see,

compet

costs

t

at

increases existing

source 24:73 attrac

Air noted gravi cost

highly

airport

Cos-r

have

As

gaso

and pro of

of

in

of for

Act

in

up

o 1996] Taxi Industry Regulation, Deregulation & Reregulation 107

Amendments of 1990, threatening draconian cuts in federal money for states and communities which fail to meet the carbon monoxide, ozone, particulate and other pollutant standards, the problems of adding more, but emptier, vehicles to city streets should be manifest. Thirty-two of the thirty-five busiest airports in the United States are located in metropoli tan areas which have been designated nonattaimnent for ozone and ca.r bon 85monoxide.’ The two means of transport responsible for the most vehicle miles traveled to airports, automobiles and taxis, are also the most significant sources of 186pollution. D. PRICE One would expect that excess capacity would drive prices down, as it allegedly has, for example, in the deregulated airline industry.’ Para doxically, precisely the opposite has occurred in th,ç1eregulated taxi in dustry. As Price Waterhouse observed, “prices rose following taxi deregulation in every documented 188case.” Professor Roger Teal of the University of California studied pricing at nine cities which deregulated (i.e., Fresno, Kansas City, Oaidand, Phoenix, Sacramento, San Diego, Seattle, Tacoma, and Tucson). He con cluded, “In every city in this study taxi rates are now higher in real terms than before deregulation, often by a substantial 89amount.” Before de regulation, in none of these cities did rates rise as rapidly as the Con sumer Price Index [CPI]; after deregulation, price increases exceeded the CPI in each of these cities.’ Professor Teal concludes, “taxi rates may have increased as much°9 as 10 per cent more in the deregulated cities than they would have done under continued regulation.” At San Diego, Seattle and Portland, prices increased 35% during the first 18-24 months of One9 source summarized the results deregulation.’ ’ 185. Annalynn Lacornbe, Ground Acce.r: to Airports: Prospects for IntermodojLsm, 48 TRsP. Q.381, 383 (1994). 186. Sec Id. at 383-84. 187. Da.a’say & Gorz, supra note 3. Actually, esdmates of consumer savings resulthg froth airline deregulation have been grossly overstated. Id. at 243-63, 281.95. 188. PRice WAT .stousE, supra note 153, at 8. 189. Teal & Be.rglund,supra note 4, at 37, 42. This confirms his earlier research on the expe rience of deregulation in seven U.S. cities. Ta..a. & BERGLUND, supra note 151, at 11. ‘The important policy lesson to be learned from the Arizona experience is that favorable impacts do not necessarily follow the removal of institutional barriers to competition in the transportation industries.” Tr.i., rr Ai.., .rupra note 160, at 27. 190. Teal & Berglund, supra note 4, at 37, 42; Te&r. & BERGLTJND,supra note 151, at 14-15. 191. Teal & Berglund, supra note 4, at 37, 44. 192. FAT Gat.a, EARLY RESPONSES TO TAXI REGULATORY CHANGES 16 (1981); S.B. Ccx. MAN,RECENTDEVELOPMEN-1-STN Th REvISIoNOF Ta REGULATioNS IN SEArrL AND SAN DIEGO, Tx..NsP. RES. REC. 20 (1980); See Paratransit Services, Inc., supra note 159, at 34. Prices rose 60% in San Diego. Stalians, supra note 7, at I, Address before the 50th Annual Convention 108 cabs, of ers normal cause taxi because overcapacity drivers

tivity effective erators each or regulatory literature a

who tively

individuals:

of other ADM..., cance higher

rr

T,&a 102 third concerning

out-of-town

the

Cabstand

193. in 194. 195.

197, 196. 198. AL., Moreover, long 199.

residential bitter pendent hoods.. purposes,

are the One trip,

created need (1981). there

study

New in

inelastic the Snsvics.s profit

from

can

.rupra of

Ta.&. FL*.ocxlA party trips 0db, TAXI The Piucs clearly Portland, See brt’i. competition. taxi Fp.soap.zc

cab

impact which

reveals Zealand source the

found practices queue a

U.S. is,

survive

. increase

note from competing

supra created R.EGULM’ORY taxi & TAX1CA on fares because lines, .[t]his by

WAmzuzousE. such rate

formal positions

tacab

with (U.S. and more

BmtaLuv’n,

Dsp’i

airport

that businessmen while with

on

taxicab excessive 160, places

Taxi

Fver. & airports pay

note described

that under as

increases

in is

refusals low-income

DOT,

Puri..ai, can partial

in pre-tax

affluent only

or

at

o’ Proprietors’ Ass’N, not trips Transportation administrative

business by respect Seattle: 192. and

the of

taxicab

8. In much

TR.A.NSP.,

rates, travelers

upward on be, service in

surprising & Rnvzsiort 1978);

and supre unlimited free at the deregulation

to if

supra an

rate, informal

.supra

entry

0oRM.r the

17; the to

businesspersons, .wpra

grocery little they

the

dollars.’98 were doitown

economic

fares of

originates “first and

Ts.’j.. persons. Teal note to with entry.”3 “[t]he

serve

TAXI Federation. note taxi

basis for note even

passenger

pressure

impact

costs and note n’t and fare

can

comparative since

& whose in

151, even

&

?oRThw, jle mobility. GUaERT, 153,

stores in, Rsout’ToRY queue, pressure

entry, 176, produced

Bergiund. short

residential

BaI.u,

high

9, of Law

ineased. stable if hotel

at increase

A changes.’ hotel

at residents in first at

at inflated. environment

price.’96 more 16.

Wellington,

Further, major of -information

8; travel

129. low-income and

5.

on-taxi

trips, fares

Journal queues

TsAI., demand vacationers, but

patrons FA stands price

out” no

or

supra

These patrons OitooN:

medical

pronounced.94

See areas supra

and price

declining RevtsIoN did

the shopping in expenses and led

st

Ez.A.s’rTcmss

rule.195 Therefore, nore U.S. increases are these fares.’5 New

some increasing

lengthen,

ej., or not note produces trips Thus, revenue to for are quarrels

or

facilities. A made feel

of service DOT 4,

Zealand. supra

and about a

minority areas C,sa

TN 151, lead

taxi

at frequently

declining

are large of

demand,

are S,’.r1 to at

50.

most Because

conventioneers. by tJj

at

note

innovations proportion

the a Stiity on ‘o service

are take the to for

5,23-4(1986); derived there among persons discouraging Draco, often Alig. particulady local

In,

number [Vol.

This

neighbor 160, an low-income

often

Exct.UswE-RIDE passengers economics

contrast, essential

cabstand

MAss

30,1988, the

(1982)

produc

taxi above-

at tourists is paid taxicab C,iz.opj of

24:73

is is

who

driv

24. de of

little next from

Tsp, of

rela be

the

op

siifl of

TEAL.

by

An

• •

TP.ANSrr D.C.

NICIPAI.

ReceN

square

Ui.ar tion

TAOCAB

113

price

charge

erage

taxi Washington,

drivers

Inc

and purchasing

numbéi

higher

take

Patrons

cent

therewith.

prices. 20 ’ patch

entrants,

19%]

208. 201.

205.

206.-

204.

202.

203.

201.

2C0.

in

lastic.Z 04

of

19

cabs

Firms Those

icab

is

overcharging, Increasing

Deregulated

who

Even

Neither

mile

Taxicab

Washington,

of

325,000

responses

the

Mss

Sheldon

(1985).

Teal

Gnt..a, T’jaca

Teal

See fare

One Id.

Id. GoItM.

SERViCES,

borne

markets,

was

SERVICE

overcharge prices

all

Taxi

fares

can

ranged

employing

at

per

of

P

time

study

who

&

&

TIts?,

This

which and

the

was

23.

resident

supra

Studies

22%.°

or

other

Bergiund,

Bergiund,

least

disproportionately

their

Shane,

capita

D.C,

are

did

Industry

REGULATIoN

r’.ssrr

more. fares

GtI.aERT. follow

TO

from performed may local

INC.,

D.C.

to

reported. 208

by occurred

the

note

and

afford

really

R2smn-t.

have

12

deregulation

An,m..,

cities

necessities,

engage

Calling

taxi

0.4 to

particularly

competitors,

Tim

their

It

(which

(City in

than

force

the

users

supra taxi

supra

192,

patron

In

Sar’.vicas,

resultant

residential

revealed it

in

Ep’acr

“letting

June,

lowered

to

Regulation,

in

academic Phoenix

QUA.LITY

Seattle,

trips,

experienced

ol

at

appears

At!

Tm

31,

pay

patrons

services

any

had note

note

1970

because

Milwaukee,

take

18.

some

in

n31

Cabs,

may As

OF

APPzic*rtoN

that

no

1985,

would

by

INC., 4, other

4,

reviewed

the

comparative

to

or

as

areas

OPEN result

eaty

at

at prices

OF

at a

(1983).

loss

argument

overcharging

low-income

the nor

139.3

Tv-Hot.IDAy

low-income

poor

to

taxi

refrain

44;

50.

supra 36% much

decline

so the

R.ESLPE2TnAL

of

6-7 be

which

Legislative

number

city

restrictions),

means

Deregulation

be

Ta.&t.

EN-nt?

have

in

growing

of

taxi

the

infrequently

charged

in

pay

trip

(1984)

generally

cabstands. 205

note

Washington.

of

in

o

correlated

taxi

entry

lower

economies

of

from

& loss

more.” 20 °

the

then

their

of

rim

that the

A1’D

one

spending

159,

persons.

“letting

Baiaowin, price

[emphasis

licenses

Reference

demand

the regulation

TAXICA.B

time,

of

riders

Fm,ax.*.x. complaints

of

and nation, 206

the

V,m.RL*.ai..E

at

price

or

fares

had

market

MAGAzn-a

have

mosL

10.

cabstand

up

D.C.;

shopping. 203

impact

that

fewer

the

have

&

varied

with

In

in

and

open

to

A

shopping.

their

either

Bureau,

in

supra of

SERVICE

not

the

market

Reregulation

by original].

Aj’rrrrRusr

Utterback, appears

other

50%

FA.RES

study

shares

the

30

of

the

from

number

times

little

revealed

somewhat

scope

46

stimulated

of

note

entry

business

dries

more

limited

(Feb.

1975) words,

to

telephone

decide”

average

above

price 02 O

ON

of

incentive

151,

appreciably

a

A to

WASH3’4GTON, with

of

reduce

L.ws

Of

In taxicabs

THE

Forty

1985)

associated

in

and

month.zm

pricing

Summary

licenses

Fhoenix

that

be

at

those

U.S.

gouging

a

the

course,

tax

money

to

COST

higher

TO 15.

popula

lower

more

over-

price

DOT

per

new

taxi

Mu.

dis

109

the

av per

OF

to

in

to of

manuscript),

Win.icroN,

(U.S.

m

$4.00

age taxi

hours

results

day)

fares.

offset

supply

factors

pect.

cab

increased. 209

110

215.

214. S

213.

212.

211.

210.

209.

Dep’t

of

Leasing

drivers

tex-m The

Per

For strong

Demand

The

There

reductions. 21 °

phone

Deregulation

In

estimated;

“Monopoly”

On industry

Dmco,

caused

We

per

TEAl.,

PAT

Teal

See

Teal

Id.

Id. behind

the

The

10-14

in

Professor

the

capita

factors

demand

example,

and

of

at

decline;

TL, the

shift

hive

at

&

& sharp

hour. 215 Gea,

a

name

Transp.,

order

37,

(U.S.

is

sr

TAxxc

partialiy

in

fare

1748;

Berglimd,

Bergland,

loss

deregulated

by

four

for

demand

hours

AS_,

48.

the

no

demand

r

deregulated

has

from

explored

Dep’t Eacts

recognition;

are:

for

excessive market;

decline

and

increases

Al.., profits

taxi

Teal

of did

.tupra

1983);

apparent

demand

under wheel)

not

Roger

MAS.AOEMZN-r

taxi

In insulates

niinimum

supra

per

supra

employee

supra

of

& not

service

for

side,

note

PAT

San

resulted

Transp.,

Bergiund.

service

o’

earned

Transportation

and

in

day,

several

create

note

deregulation

note

taxi

note

cities

than

TA.xl

Gai..a,

entry.’ 2

Teal

160,

productivity

imposed

factors

cities

cost

Diego,

Professor

taxi

is

160,

4,

service

4,

six

1983);

may

at

under

characte±ed

wage

E.

RZCT.n.ATORY

a

drivers

28,32

before

supra

at

Emcrs at

ñrms

in

has

basis

14.

reasons

at

driver

earned competitive

days

46.

44.

be

14;

lower

which

Ti

driver

INcoME

by

is

note

(FalL

regulation

from

guarantees

succinctly

RoGER inelastic;

with

Teal

in

either

OFTAIG

deregulation. 214

a

to

taxis

Law

(the

income

&

4,

1986):

less

why

week, Phoenix,

fares,

militate

the

owner-operator

BERG!uNn,

wages

at

REVISION

offered

T.&t.,

on

by

industry

stable

reduction

46.

(often

Journal

under

passenger

REGULATORY

Teal

excessive

were

imperfect

which

as

earning

summarized

TAlaci.a

decreased

for

declined

&

against

or

we

drivers

these

IN

Bergiund,

despite

significantly

supra

deregulation

structure

taxi

suffering

to

S

would

market. 21 ’

of

capacity

REGULATORY

information

only

note

REVISION

predicate

revenue

explanations:

drivers. 213

Dno,

worked lower

or

30%

supra

spending

despite

151

in

intuitively

from

lease

about

three

less

the

(unpublished

Dote

from

in

CALIFORNIA

fares,

U

[Vol.

have

trips

an

long

price

SEArrLE,

the

tele

than

CHANGE

drivers

and

higher

4,

$2.00-

supply

more

Most

aver

at

pre

24:73

taxi

per

not

The

46. ex 1996] Taxi Industry Regulation, Deregulation & Reregulation lil deregulation levels, to only $135 a 216week. Such poor pay is for a job which has the highest homicide rate of any 217profession. F. SERVICE As we have seen, most of the new entry unleashed by deregulation has been by small companies in the airport and hotel cabstand market — a market traditionally well served—in effect, “cream skimming” the least costly market. The telephone dispatch market, upon which most local residents rely, is generally left with the same, or poorer (and more highly priced), service as before, since taxis in the larger firms are now dis suaded from entering the end of a longer queue at the cabstand market, and forced to focus on the higher-cost radio dispatch market. The radio dispatch firms have lost between 10% to 25% of their business because of the need to abandon the cabstand markets, which were the least expen sive markets to serve (for it requires neither dispatching operations nor equipment dead 218beading). As we have seen, excessive entry leads to declining productivity, and because fare increases failed to keep pace, declining profitability. A car rier facing profit erosion can reduce costs by “lowering the quality of taxi services (for example, employing a small or deteriorated vehicle, reducing insurance coverage, or driving 219recklessly).” Not only has deregulation generated little service innovation,° it is not unusual to see several ser vice problems arise when the regulatory system collapses, including: Excessivefares; Circuitous routing;and Refused 21service? Most cities which deregulated experiencd a deterioration in service. The taxi refusal and “no show” rates increased, particuiarly in low income areas,m although there were many ..short haul refusals at cabstands as well (probably by drivers who had sat in the queue too long and needed a long trip and a decent fare to compensate them for their inactivity) ?2

216. TEAl.., supra note 212, at 32; Teal & Bergiund, supra note 4, at 42. 217. Death On the Job, T EcoNoMist Dec. 3, 1994, at 39. 218. Teal & Bergiund, supra note 4, at 54. 219. Gaflick & Sisk, supra note 9. at 120. 220. “Exclusive ride taxi service remains the only service offered in the deregulated cltis.” Teal & Bergiund, supra note 4, at 46. See ThAi., at ‘.i..., supra note 160, at 13; Rosenbloom, supra note 13. 221. ROEERT TAlocAs Da O?Marr5 ni Lcs ANOELES, 4 PROCEED. nicso a Cozca ON T..,as As PUEUc Ta.&rsrr 65 (Univ. of California, 1978) (describ ing the illegal activities of taxi “bandits” which emerged after a major taxi company fell into bankruptcy). Sec generally, Suzuki, supra note 20, at 129. 222. Sec PAR.ATR.ANSrr SERv1s, INC., supra note 207, at 24. 223. See Pics WATI1RHOUSE, supra note 153, at 15. 7}ansportation Law Journal [VoL 24:73

The “no show” rate at Seattle increased 35% after deregulation; the “no show” rate at San Diego increased from 5% in 1976 to 18% in 1979.224 The oversupply of cabs reduced the earning potential of drivers, causing a decline in the quality of the drivers, and leading them to engage in overcharging and discourteous behavior? Indianapolis, among the first cities to deregulate entry in the taxi industry, experienced the follow ing problems: After the first winter the independent operators found they had no moneyto maintain or repair their vehicles. Insurance cancellation notices receivedby the City. . . increased from “oneor two”per month to “aboutone hundred fifty” per month. Complaints to the Cityabout cab service“tripled”. Added to these difficulties wasa reported rise in the amount of crime by taxi drivers and operators.. . [tjhe reported rapes and robberies committed by ta’d drivers also 226increased. Reviewing the Indianapolis experience, the U.S. Urban Mass Trans portation Administration concluded, “adding new owners into a highiy competitive supply-rich market is beneficial neither to the public nor to the taxi 227operators.” Customer complaints in Fresno, California (where deregulation lasted only eighteen months), tripled, and they ranged from price gouging to the poor upkeep of the 222vehicles. In San Diego, many drivers re- fused short trips, and drivers at the end of the queue sometimes sought to serve passengers at the head of the line — often generating physical alter 229cations. In Phoenix and San Diego, the visitor and convention bureaus pushed for re-regulation? The Washington state legislator who led the successful fight30 for taxi re-regulation said, “taxicab riders have been get ting ‘raped’ by poor serviceancfxpensive fares ever since Seattle area taxicabs were deregulated.... “1 Another source summarized the Seat tle community’s response to the problems created by taxicab deregulation

224. TEAL & Bactu, supra note 151, at 10. 22.5. MUurIPUCATIONS, INc.. supra note 161, at 40. 226. U.S. DOT UR MASSTsp. An., Tia INs,t.’..’&ous E wxria Onw ENrRYn. n Ta INnusrws 9-10 (1980). Drug and prostitution rings were also operated by the unregulated taxis. Ic Taxi drivers also often are victims of crime. Statistically, taxi drivers and chauffeurs suffer the highest homiciderate of any profession, even higher than policemen.Death On she Job, supra note 217, at 39. 227. Id. at 15. 228. See PARATRANSTt SERvtcss, INc., supra note 159. at 10. 229. Rosenbloom, .vupranote13. 230. See Shane, supra note 207, at 46 P risrr SERVSCES, INC.,supra note 159, at 2.3. 231. Doug Underwood, Taxi Regulation Is Back in Laps of Lca! Governments,Sa.’rrt Ttt.ns, Feb. 26, 1984, at 52. 19961 Ta.xi Industry Regulation, Deregulation & Reregulation 113

The troubles in the cab lines—largeincreases in fares, substantial varia tion in fares among taxis, much longer taxi lines, refusals by drivers to carry passengers short distances, and minor violence—convinced area officials, ho tels, and the tourist industry that this market was not suited to full-scale 232decontroL After deregulation, both Washington, D.C., and Atlanta, Georgia, experienced increasing problems with drivers who had a language prob lem and poor knowledge of city streets, were overcharging customers, and were dishonest by not taking the most direct route. Service quality deterioration under deregulation also prompted calls3 for entry regulation by Congressional and media leaders in Washington, D.C. The Wash ington Post recently had this to say about taxi service in the de facto der egulated District of Columbia market (one out of four D.C. cabs operates with an illegal permit, and bribes for the issuance of inspection stickers and operating permits were under criminal investigation):

[T]he District’s cab fleet averaged 10 accidents a day last year — around 3.800 annually. That’s more crashes than there are cabs in Los Angeles, Philadelphia, San Diego and San Antonio combined. [D)rivers routinely overcharge passengers, bribe their way through safety in spections, swap cars and drive without insurance.

Though ours is the nation’s 19th largest city, Washington harbors at least three times the number of cabs of any other city in America except New York and Chicago. (Onlyone, New York, has more cabs—11,500.) Since this massive oversupply means fewer fares per driver, many cabbies make ends meet by cutting corners—for instance, refusing trips to out-of-the-way places, overcharging or skimping on 5repairs. Atlanta suffered many of the same problems under deregulation:

The taxi industry... has historicallybeen criticizedby élWvisitors for the poor condition of its vehicle fleet, the sloppy appearance of drivers and their negative attitudes, apparent driver lack of knowledge of the city, arid fre quent instances of overcharging. Officials of local commerce and trade orga nizations consistently complained that the industry was an embarrassment to

232. Richard Zerbc, Jr., Seattle Taxis:Deregulation Hits a Pothole, R ui_’.i-ioi’t,NovfDec. 1983,at 43, 47. At the Seattle Amtrak station, “There were reports of physical intimidation, of drivers who lied about the availability of bus set-vice,who were SiOVflly, vulgar, and rude — and soon.” Id. at 46. ‘The Sea-Tacairport has had even worseproblemsin itscablines,... Many [driversj refused short-haul customers.... Drivers were lessknowledgeable, cabsdirtier.” Id. at 46. 233. PAI...m.Nsrr SERVIcES,h4c., supra note 207, at 14,20; MULTtI’UcAnONS, iNc., supra note 161, at 18-19. - 234. U.S. Dp’t OF Tastsp., supra note 4, at 130.

235. - Christopher Georges, D.C.’: Checkered Cabs: Why Washington’s TaxisAre Americas Worst,WASH. Parr, Mar. 21, 1993,at Cl, Ci 114 increased nation,239 vest ample, inadequate prior tion, ance

ministrative governmental tion creased.242 costs often

spent regulations.24

of

taxicabs while

159.

236. 237. 238.

239.

240.

241. 242. 243.

taxicab

the

Taxicab provements cases, Poor tions at As The in

Although

After

case

Atlanta also

vacation

to

to

lead

45. more

MTJt:rwuc’.rIoNs,

Rosenbloom, city PRiCE Washington, new A

PArR..r-lsrr Piuca Rosenbloom.

Roscnbloorn, per

a

fail

departure.

taxi 1979

profitability

result, 50%

have the have

also

capita

studies

and

the

deregulation,

vm. concluding

equipment

had

deregulation

cabs,

under

WATERHOUSE,

WATERHOUSE, In

money costs.

telephone

benefits

operator

scrutiny

lobbied

suffers

in charge or

2.8.

during

one

not

been several

as

in

service

causing

supra

supra the

supra

business

regulation, Saiwzcas,

Su?ts.Y reveal

U.S.

For

1981,

been

would

D.C.,

that

next its

Consequently,

levied.

survey

strongly

Transportation

from

INC., G.

made

for the

note

maintenance, note

Dap’r note

several

is of

cannot instances, are proponents example,

.sispra

supra

highest Professor

developed.

it the Atlanta

the

the TAXI

with re-regulating that supra first

revealed

A 13.

13. Iic.,

13. difficult

intuitively

traveler

the

ever

ce

it

note

for

notc first

average industry,

in

OF

be

impossible TLsp., three

note exhaustive the

city, supra

such

oldest

DEREGULATION

reform.6 fact,

had

153, THE demonstrated under

1.53,

that reimposed

ts’rP.rrvE

introduction to

consumer

expected.

most

Atlanta.

161,

Roger

note

has,

the

detect, years There lack

at

costs

at

Washington, the

Law

in

fleet?4° age EMPIRiCAL supra

expect

at

15.

and

16:

the

207,

deregulation,

taxis

convention

34.

enforcing

and

U.S.

of

for

PARATRANSFr

of

Washington

studies Teal

of

and

Journal

note

either

is

correspondingly

taxi

PrIces

at

cleanliness,

complaints vehicles

Cos-rs entry deregulation.24t

many

per

little 11. the

government

to

Department

new

Seattle’s

4,

to

D.C.,

concluded:

industry.

have

at

capita

do

last

RESULTS the of did

price-service

61-62.

controls.237

the evidence

taxi

had had

not

and

the

SERVICES,

to

produced,

Seattle

city

not impression

five

remaining

14.7

and

average companies

of

usually

grow.2-38

led

empirical

hotel

times that

any

change administrative

per of

OF

increased poor

that

to

estimated

Transporta

Itc.,

combina

Charges

1,000 [Vol.

fall,

city the in

a

industries

enhanced

fleet

either

conven

appear

most For

supra

number

he

vehicle

residents,

im

results in

or

to

24:73

age

has

the

ex

ad

iii..

in

note

of

it

of 1996)

deregulated

ulation service dustry. and 31. cities experience

244.

245.

which competitive parently consumers lation Although jor service entrants regulation, most [T]he reduced tractive pre-deregulation was limited Prices First, not creased egulated The creases. Second, deregulation. Service taxi generally and entrants are

A

profitability,

Given

in

more

Teal

cabstarids.

PRICE

characteristic TaxI

invoke

concentrated

queues,

benefits,

aggressive

cabstand have

new

Of

benefits the

fare they is

rose

improvements

quality

& capability

side

significantly.

new to

obtaining a

further.

had

the

Veteran

with industries.

WATERHOUSE,

reached

price the the Industry

Berglund,

recent

entrants

mixed

or group

were increases

the the

rejected

in the

unregulated

comparison effects:

entrants

no

producers

failure supply

markets every

of

There

supply

twenty-one industry,

coupled declined. Customer

passenger

deregulation

price insensitive most

previously

incentive

deregulation blessing.

performance.

Response at of

study

operators

to

(i.e.,

low

were

supra

similar

already

a

instance.

prior Regulation,

Prices

it, of

competition

serve

appear were

communities of generally worsening

of

eamings.2

on supra

are who

taxi note Berkeley, taxi independent shopping environment,

and

Thp

with by

wait deregulation solicitation

to

which

and,

to

experienced

Many denied

the

better

rose

well-served times

Price

conclusions:

services servicer thus

4,

note cities now

introduce

refusals, to

re-regulated,

deregulation

Paradoxically,

were

its times

at was

because charged

telephone-based

Trip

in

be

54;

an

these

153,

have

corrected have is

typically propensity

in

access. off.

Waterhouse

service

Deregulation

so two See which discouraged.

devaluated

average California,

at increased

the

expanded which

associated

operators

refusals

at

a

and

The

been

by an

operators price aLto poor these

decline locations—such higher

Il-Ill of

sources

to

telephone

Even

consumers. opportunity

quality those

the

had experienced

TEAL

one

deregulated prices

produce

have

unable

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competition.

in of

locations,

[emphasis

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fares

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dramatically, in

and important by

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have

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first-out

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to

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of

already in

as

over-supply

or

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unexpected

serve

veteran original]. four most

however, age

carrier fleet

of

exception new

their

first

other

survived

airports

prior

reasons,

part,

deregulation.245

were

lagged

2.3%.

year

only

and

Washington,

.wpra

a

however,

nature

in

owners

new a opportunity. entrants

of

set-vices

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newly-der

market

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operators.

similar

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condition,

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cities

to following

marginal

productivity

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and

pricing deregu

note with

are

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1993, unat

were

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smallest

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did

taxi

are

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in which

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dereg to

115

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30- less system.246 coma, 116

tions which of rience re-regulated the a petitive deregulated.249

ternalities, ture, have

duces destructive income, deleterious tion, senger operational objective costs induszry

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relatively

246. 248. 247. 249.

250.

the

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largest

which monopolies nesses can charging area marker hibited ing

reliant

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Taxicabs

energy seen, conducive

and

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factor One following

keep

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taxicab

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at could

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reasonable

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without

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assessment

deterioration considered source

which the

exorbitant cities cream

17.

prices

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deregulation. on

large

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efficiency

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unregulated

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would provided the supra at

deregulation

19.

imperfect

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services. characteristics:

continued

an population, skirnmhig,

regulation

a

those rates

governmental

low-cost little

increase

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piices,

reasonable publicly and

FOR

a essential

note

the Transportation of

new

and

and utilities, to

whG

and activity;

argue,

a

Springfield, competition,

or

in

the

comprehensive Moreover, thereby

market 8,

of

market,

most

without

GOVERNME]AL

and

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indispensable

is warned

social

information, no at a. taxi service,

market productivity,

in

to

level.

public deetned the

empirical

33.

are

decisions outweigh

a

•“248

part

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environmental

improvement

new

embrace

justifying

airport

market

result,

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supplying high

unjust

loss required

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entry?47

(1)

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Early

in

authotity.

needed of

(3)

The entry entrants,

necessary and

theory,

Illinois)

of

nature

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rationale

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discrimination. collectively

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common

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had

activity relatively

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economies

its

to

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wave

deregulation

significant

because

service

tended

new

an urban

government

serve

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benefits.

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implemented

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for cities of

regulation

in increase retained

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service,

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contrast,

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public

airport

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appears

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taxicab

administrative

transportation

established

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to

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smalier

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transactions

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City Chicago Philadelphia Los Denver Phoenix San Anerican Seattle San

selected

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or

TAXICAB

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the

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during

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must found

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and

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emerging, financial 24

taxicabs be

meter. should

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ov be

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For state

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congestion,

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system

23,

local

Congress ideologi left on

1995,

24:73

their

alone

and con

that aL

of

40. for

prepared Taxicab

Cincinnati, Institute

International North Review 3849 Box

$25 May © $50 International for for

8601,

1998

Farragut

Carolina 1TLF Non-Members by

for &

Raleigh, ITLA

Transportation Taxicab

Taxicab

of

Avenue,

State

Regulatory Members and

NC

Indianapolis,

University

and Livery

27695-8601

Kensington,

Livery

Research Foundation

Foundation

MD

Changes

and

20895

Education

and

Seattle

in Review of Taxicab Regulatory Changes in Cincinnali. Indianapolis, and Seattle

Table of Contents

1.0 Introduction 1 1.1 Importance of the Taxicab Industry 1 1.2 Taxicab Organization Structure 2 1,3 Theory of Taxicab Regulation 3 1.4 Taxicab Regulation in Practice 3 1.5 Deregulation in the Taxicab Industry 5 1.6 Study Goals/Objectives 6 1.7 Data Collection Methodology 6

2.0 Cincinnati, Ohio 7 2.1 Introduction 7 2.2 Historical Changes in Taxicab Regulation - 1940’s to 1993 7 2.3 Motivations For the 1994 Regulatory Change 8 2.4 Key Provisions of Regulatory Changes - February, 1994 9 2.5 Impacts From the 1994 Regulatory Change 12

3.0 Indianapolis, Indiana 16 3.1 Introduction 16 3.2 Historical Changes in Taxicab Regulation - 1970-1993 16 3.3 Motivations For the 1994 Regulatory Change 17 3.4 Key Provisions of Regulatory Changes - 1994 19 3.5 Impacts of the 1994 Regulatory Change 22

4.0 Seattle, Washington 27 4.1 Introduction 27 4.2 Historical Overview of Taxicab Regulatory Changes - 1979-1996 27 4.3 Motivations Leading to Additional Regulation in 1996 29 4.4 Key Provisions of the 1996 Regulatory Changes 29 4.5 Impacts of the 1991-1996 Regulatory Changes 32

5.0 Discussion: Cross-City Comparisons 36 5.1 Introduction 36 5.2 What Taxi Regulatory Changes Occurred? 36 5.3 What Were the Motivations for These Changes? 37 5.4 What Have Been the Impacts of These Changes? 38

6.0 Conclusions 45

Bibliography 48

Institute for Transportation Research and Education This changes Cincinnati, comparisons, information by through motivations of corporations of Myths industry/government being taxicab supplies, 1.1 The an passengers everywhere One These It unique year few bus passengers, past using transit with sedans, miles. providers. 1986, serves last the industry the passengers exceptions, amount poorly operated twenty hospitals, report the the 170,000 resort numbers, study and buses public Importance as Thus, is and 4.0 virtually occurred. automobile last mode also a perceptions Ohio; (Stanley for In at nearly on understood though approximately for years presents and findings operated describe and transporting and the over year and nearly 1986 the which taxicabs corporations, the those (Gross of however, are urban Indianapolis, range Section all U.S. by the mode 400 for ubiquitous taxicab last of nearly and contracts locally cities dealers regulation, This any images changes, it transportation the by the which taxicab the taxi about rail million resort and characteristic of and is Burby, of time. poorly 6.0 customers underestimate results Taxicab and regulatory industry, first introductory service two-thirds two systems industry choice Feldman, owned. operating transporting cities, presents are taxicabs national with (transportation industry Indiana; industry towns vehicle-miles, and billion necessary and 1988). qualified very of for provided

1.0 public transit the Industry and taxicab is a policy-makers Thus, in and misleading. a of study survey of are changes review many 1994). 10.1 of that urban impacts and has larger the This study section the service the the very comparable authorities, agencies, drivers,

Introduction packages, to U.S., Seattle, provides billion it conclusions. diversified company by business industry taxicab size figure data understand rail safety and of is than Taxicab different of that of taxicabs customers, the an of and and passengers, urban are the taxicab the vehicle-miles. Amtrak. Washington. at compares such indigenous net) study occurred the operators service hospitals it is and importance available, travelers, organizational industry size--depending changes. all does through operators from buses its as report for the in human levels data regulatory availability and transit the so twenty-four the context reality. and with operated in provided is transporting collection through tourists, industry a taxicabs United new presents of Section elderly, To frequently service each wide of in over authorities Urban about government. understand the structures, services, 1986 in Often changes on range of of about five operations States which taxicab special services that transported 5.0 agencies. hours disabled twenty rail process. provides the service. the provided billion misunderstood viewed blood provides of is two and measure--of systems such is three these a a businesses. in the school available industry. million staggering. under day, perspective In billion human and which, The three and Sections It urban significance background as as this addition 1.43 regulatory cities, is cross-city everyday. that poor, executive a students, contracts extent medical perhaps Amtrak service vehicle service service billion cities: with nearly transit In urban same both It 2.0 the the the of to In is of a Review of Taxicab Regulatory Changes in Cincinnati, tndianapolis, and Seattle contracting is evident in the fact that in 1986 only 83.2% of the vehicles in the taxicab industry were taxicabs. That is, there were 170,000 taxicabs plus about 34,000 vans, buses, executive sedans, and limousines operated by taxicab companies. When these additional 34,000 vehicles are included, the taxicab industry transports 2 billion passengers per year.

1.2 Taxicab Organization Structure

In interpreting the results of this study it is helpful to understand the organizational structure of the taxicab industry in the U.S. and in these three cities. Typical of the local taxi industries in other large U.S. cities, the local taxi industries in Cincinnati, Indianapolis, and Seattle are characterized by three factors:

1. Independent contractor drivers; 2. Extensive competition; and 3. A variety of organizational structures.

It is appropriate to explain how these factors are present in these three cities.

According to a 1986 national survey, more than three out of every four taxi drivers work as independent contractors (Stanley and Burby, 1988). “Independent contractor” in the case of taxi drivers means that the driver either owns or leases his or her taxicab vehicle and is free to work where, when, and how he or she wishes, subject to city regulations. Independent contractors operate as small, one-person businesses rather than as employees. Given that the trend toward independent contractor status has not abated in the eleven years since the 1986 survey, it is likely that few employee taxi drivers remain in most large cities. The taxicab fleet owners interviewed for this study indicated all their drivers worked as independent contractors.

One of the myths of taxicab service is the belief that a single company owns all the taxicabs in.a city. The Stanley and Burby 1986 survey found that in cities over 200,000 population only 6.9% of the responding companies operated all the taxicabs in their cities. In fact, 58.9% reported that they operated less than half of the local cabs, and many of these were operated by owner-drivers who owned their own cabs but operated under the auspices of a fleet operator.

This large amount of local competition is evident in Seattle, Cincinnati, and Indianapolis both before and after their recent regulatory changes. In 1994, before it opened entry, Indianapolis had 392 cabs licensed among three major companies, several small companies and cooperatives, and 26 independent owner-drivers. In 1995, prior to implementation of the requirement in Seattle that all taxicab operators belong to an association, there were 210 independent owner- drivers and seven companies. There was also extensive competition among 20 companies operating in Cincinnati prior to the relaxation of entry requirements in 1994.

These three cities also reflect the national picture of organizations within the local taxi.industry. All three cities have taxi companies in which some vehicles are owned by the company and leased to drivers and some vehicles which are owned by drivers but which are operated under the auspices and color scheme of the company. All three cities also have associations or

Institute for Transportation Research and Education - May l99 2 Review of Taxicab RegulatoryChanges in Cincinnati, Indianapolis,and Scatle ccperatives composed of owner-drivers. And, all three cities have large numbers of owner- drivers who operate as one-person companies.

The importance of these three organizational forms results from the very different ways in which they operate. Companies, as well as some associations, often work hard to market taxi service among local businesses, tourist facilities, and general public. Companies and associations also typically have dispatch services for their drivers, and in most cities operate twenty-four hours a day. Individual owner-drivers, on the other hand, seldom do marketing, are not affiliated with dispatch services, and normally serve walk-up locations such as airports and hotel stands.

1.3 Theory of Taxicab Regulation

The underlying theory and rationale for governmental regulation of taxicab services is that such regulations are necessary to correct market imperfections. Simply put, market imperfections exist when the necessary conditions for a free market are not met (Frankena and Pautler, 1984). Some of the most important of these conditions are: many service providers; many consumers; and perfect information among consumers about the prices and qualities of all providers. In many industries these conditions are met. Restaurants are an example; there are many restaurants, and prospective diners can examine a restaurant and even review its menu before deciding to dine there. A diner can even leave a very unsatisfactory restaurant. Moreover, each restaurant has a clear identity and location, so an unsatisfied diner can decide whether or not to return to the restaurant and can tell his or her friends about the quality and price of the restaurant. There are even reviews and guidebooks rating restaurants.

For taxi service the situation is generally very different. For local taxicab consumers who frequently telephone for taxicab service, the conditions might be met. However, for other consumers the situation is very different. Persons hailing a cab, engaging a taxicab in a queue at a hotel or airport taxicab stand, trying to get a taxicab in the middle of the night, or simply not frequent taxicab users all lack adequate information on alternative taxicab providers and lack the ability to shop for cab service. And, an unsatisfied taxicab user—unlike an unsatisfied diner— may be unable to exit a moving cab in hopes of finding another, more satisfying one. For all these situations there is a need for regulations that ensure the taxicab user that some level of safety and service is met by all taxicabs.

1.4 Taxicab Regulation in Practice

Generally, taxicab regulation is a municipal responsibility. It is entirely so in most states; in a few states, such as Pennsylvania, Neyada, Maryland, and Kentucky, there is limited state involvement in taxicab regulation.

Taxicab regulation is of two types: (1) economic regulation; and (2) safety regulation. The second of these is relatively uncontroversial. Cities impose certain licensing requirements on taxicab drivers and vehicle owners. Drivers must meet age, health, driving history, and character standards. Vehicles must meet safety and design standards. While there is sometimes

Institute for Transportation Research and Education . May 1998

3 Reviewof Taxicab RegulatoryChanges in Cincinnati, Indianapolis. and Seattle controversy over how these standards are imposed and enforced, there is fundamental agreement that cities should impose safety regulations on taxicabs and drivers.

Such is not always the case for economic regulation. Economic regulation consists of three types: (1) entry controls; (2) fare regulations; and (3) service requirements. Of these the latter two are also relatively uncontroversial. Virtually all cities, other than a few very small ones, impose some restrictions on fares, either by setting a uniform fare or by setting a maximum or minimum fare. Service requirements include two-way communication, 24-hour service, prohibitions on soliciting passengers, conditions under which a driver can refuse to transport a passenger, and many other such provisions.

It is the entry controls that provide the controversy in taxicab regulation. Entry controls are requirements that cities place on applicants for taxicab operating licenses, not on taxicab drivers’ licenses. Cities vary considerably with respect to the strictness of their entry control, and there are six categories in which these entry controls fall. These are: 1. Fixed ceiling or medallion (30.4 %) 2. Public convenience and necessity (25.4 %) 3. Minimum standards (17.6 %) 4. Open entry (12.2 %) 5. Population ratio (8.7 %) 6. Franchise (5.7 %)

The numbers in percentages are the percentages of U.S. cities with each type of entry control (Shaw et al., 1983). Note that one-half of the cities with open entry had fewer than 10 taxis in the city. Also, the restrictiveness of entry in cities using a population ratio depends on the ratio chosen.

Of these entry controls the first and last ones elicit the greatest attention. Economists, reporters, and taxicab regulators in other cities point to New York City, which has had a medallion system since 1937 and whose medallions now trade for over a quarter million dollars. To critics the New York situation represents the archetypal example of the problems of a system that fixes the number of medallions over time. On the other hand, the elimination of all entry control (#4), which is discussed in the remainder of this report, creates a set of other problems such as higher fares, poor quality drivers, overcrowding at key taxi stands, poor vehicle conditions, etc. (Price Waterhouse, 1993; GeIb, 1983a and 1983b; Zerbe, 1983; Teal, 1987).

Often lost in the debate over entry controls is the fact that there are four other mechanisms for controlling entry. To varying degrees these mechanisms blend control over entry, the ability to expand taxicab supply to meet demand, and the preservation of competition. The franchise mechanism, for instance, is used by Los Angeles to limit the number of taxi companies while allowing these companies to compete with each other and to grow or contract according to how successful they are in this competition. The minimum standards option means that there is no limit placed on the number of taxicab providers but each one must meet certain standards of customer service, such as a minimum number of taxicabs, a place of business, twenty-four-hour dispatching service, and a maximum age of vehicles. The other two mechanisms are merely ways to expand the total number of taxicab licenses over time if demand increases.

Institute for Transportation Research and Education. May 1998 4 Review of Taxicab Regulatory Changes in Cincinnati, Indianapolis, and Seattle

1.5 Deregulation in the Taxicab Industry

During the aftermath of the airline deregulation of 1978 there was a concomitant interest in deregulation of other transport modes, including intercity buses, trucks, railroads, and taxicabs. However, whereas these other modes were regulated at the state and national levels, taxicab regulation is usually a local matter, and hence deregulation was a local decision. In fact, few cities opted for deregulation; Price Waterhouse (1993) found that 21 cities had deregulated their taxicabs prior to 1983 and that no cities were known to have deregulated between 1983 and the time of the Price Waterhouse study in 1993.

Still, these 21 cities--especially Seattle and San Diego--received extensive attention from transportation regulators across the country and were extensively studied (Geib, 1983a and 1983b; Teal, 1987; Frankena and Paulter, 1984). “Deregulation” in the case of taxicabs almost always has meant “open entry,” a term that means a dramatic reduction in requirements that an applicant must meet in order to be granted a license to operate a taxicab. A few cities have also experimented with deregulation of fares, but primarily deregulation has meant open entry into the industry.

These 21 cities show the dramatic differences between economic theory and actual results. Proponents of taxi deregulation argued that open entry would enable new, better operators to enter the taxi industry, thereby instilling more competition which would improve service quality and reduce fares (Frankena and Paulter, 1984). In reality, nearly the opposite occurred as fares increased and service quality declined. New entrants did not enter the industry; rather, existing drivers became independent driver-owners and congregated at airports and hotels. Price Waterhouse concluded, “In retrospect, the effects of taxi deregulation have ranged from benign to adverse.”

Dempsey (1996) has presented the theoretical explanation for the differences between the predictions of deregulation proponents and the actual results. He argues that, unlike the other deregulated transportation industries, the taxi industry is characterized by low capital costs and customers who do not have the opportunity to shop among different taxicabs. As a result, in a deregulated environment taxicab operators have a perverse economic incentive to drive down their costs and service quality instead of competing for new customers. The result is a proliferation of owner-drivers who can enter the market without incurring costs for a central office, dispatching, 24-hour service, marketing, and sit at public stands at hotels and airports.

Given the results of the 21 cities’ experiences, it is easy to understand why Price Waterhouse found only 4 cities had retained their open entry regulations and that the impetus for re regulating the industry came first from the airports. The recent actions by Seattle represent a full circle return to regulation after experimenting with open entry and deregulated fares in 1979 (Zerbe, 1984; Lewis, 1995; Avants et aL, 1995). The actions of Indianapolis and Cincinnati, however, are noteworthy as the only two cities in the past decade or so that have chosen to deregulate their taxi industries.

Institute for Transportation Research and Education - May 1998

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to Review of Taxicab Regulatory Changes in Cincinnati, Indianapolis. and Seattle

2.0 Cincinnati, Ohio

2.1 Introduction

The metropolitan area of Cincinnati covers 3,810 square miles and had a 1990 population of 1,744,124. The City supports a variety of public transportation alternatives that includes fixed- route bus and specialized human transportation. Taxicabs are a vital component of the public transportation network. The area is serviced by 499 taxicabs representing 44 taxicab companies. In 1994, Cincinnati adopted a taxicab ordinance that relaxed entry into the market. While this ordinance maintained the public convenience and necessity form of entry regulation, new criteria were inserted which made it much easier for applicants to demonstrate that new services would meet the needs of public convenience and necessity and thus gain entry.

2.2 Historical Changes in Taxicab Regulations - 1940’s to 1993

During World War II, a two-tier system for regulating vehicles for-hire was implemented in Cincinnati due to wartime restrictions on fuel, tires, and vehicles. This was the first occurrence of opening entry into the taxicab industry in Cincinnati. In addition to taxicabs that operated throughout the metropolitan area, automobiles for hire were authorized to operate only in suburban locations. Business for the latter operators was generated through telephone calls only; automobiles for hire were not allowed to use taxicab stands. Following World War II, automobile for-hire operators were allowed to become licensed taxicabs.

In 1986, public vehicle regulation was transferred to the Office of Consumer Protection from the Police Department. There were a total of 348 taxicab licenses issued to serve the city. Additional licenses were not issued due to an inability of applicants to prove an unmet need to serve the public convenience and necessity. Yellow Cab of Greater Cincinnati held approximately 275 of the 348 licenses and leased licenses to individual drivers who operate their own vehicle.

In 1987, an individual submitted an application for 80 taxicab licenses and proposed this new company would use new vehicles and outfit drivers in uniforms. At a public hearing, existing taxicab company owners prevailed on the City Council to place a moratorium on issuing new licenses. One council member requested that the Chief of Consumer Protection rewrite the ordinance to better reflect his view of how the taxicab industry should be regulated. The council member who made that request subsequently became mayor.

The City Council dealt with the proposed revisions to the ordinance on a piecemeal basis. The only significant change that was adopted was the addition to the vehicle safety inspection program of an annual mechanical inspection to be conducted by an Automotive Service Excellence (ASE) certified inspector.

Institute for Transportation Research and Education - May 1998

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in Review of Taxicab RegulatoryChaages in Cincinnati. Indianapolis,and Seattle potential means of improving the safety, maintenance, and appearance of taxicabs and improving drivers’ appearances through changes to the ordinance regulating taxicab 3operations. Taxicab company owners were opposed to open entry because they believed that drivers would start independent companies, generating two unfavorable consequences. First, existing companies would need to recruit new drivers to replace those who left to form their own companies. Second, new companies would not be required to utilize central dispatching, provide 24-hour service, or provide service to all areas within the City. Each of these practices, while enhancing the quality of service, adds to the cost of providing taxicab service. If these requirements were to be deleted from the ordinance, existing taxicab companies would be competing unfairly with new independent operators who would not be required to shoulder the same cost burdens to provide service, leading to an overall degradation in taxicab service. The existing fleets will then have to re-evaluate whether to continue to provide late-night service and to respond to short trip requests.

2.4 Key Provisions of Regulatory Changes --February, 1994

The Cincinnati taxicab ordinance was revised effective February 1994. The 1994 ordinance (Chapter 407: Public Vehicles, Chapter 408: Drivers’ Licenses for Public Vehicles) applies to taxicabs, limousines, handicapped livery vehicles, animal-drawn carriages, and pedicabs.

The 1994 ordinance retained the provision that applicants prove a need for service based on “public convenience and necessity” in order to obtain a license. However, the primary criteria specified for public officials to determine if a public vehicle license is to be issued include:

- “Whether the vehicle for which the application is made is a suitable vehicle to be operated as a taxicab....” - “Whether the applicant’s proposal will increase taxicab service in areas of the city where taxicab service levels are deemed inadequate....” “Whether the applicant’s proposal includes service improvements above the level of service generally available from taxicabs currently operating in the City of Cincinnati.” ‘- “The applicant’s history in the operation of taxicabs or other public vehicles in the City of Cincinnati and other communities.” - “The applicant’s procedures for inspection and maintenance of its taxicabs.” “The applicant’s training procedures for its drivers.” “The applicant’s rules and regulations governing driver’s appearance and conduct.” >- “Other matters presented by the applicant or other parties which relate to the issue of the public convenience and necessity which the director deems of value in determining whether the application should be granted or denied.” - “In determining public convenience and necessity the director shall not consider the impact an applicant’s business may have on the business of existing license 4holders.” Ibid. Cincinnati Municipal Code, Chapter 407: Public Vehicles,Section407-7: Issuance of Public Vehicle Licenses, February, 1994.

Institute for TransportationResearch and Education - May 1998

9 Reviewof Taxicab RegulatoiyChanges in Cincinnati, Indianapolis,and Seattle

The final criterion has been interpreted as removing any burden of proof on the applicant for showing public convenience and necessity and thereby effectively eliminating any cap on the number of taxicab licenses that the City may issue. Anyone with a vehicle passing inspection and appropriate insurance coverage may now apply for a taxicab license and be likely to be granted a license.

The 1994 ordinance removes any service requirement, including 24-hour service, all-city service, and dispatching service. In contrast, however, to its hands-off approach to service requirements, the ordinance does stipulate a minimum fare of $3 per trip.

The 1994 ordinance does not state a cap on the number of licenses that the City may issue. There were 347 taxicab licenses issued and 20 Companieslfl business in 1993just prior to open entry. Following adoption of the new ordinance, the number of licenses issued quickly rose to 587, and the number of companies in operation rose to 40. The number of independent owner-drivers increased to 19.

In 1998 there are currently 44 companies licensed to operate taxicabs in Cincinnati. Twenty- three of those companies are independent owner-drivers. Another three companies are comprised of an owner-driver plus one or more other drivers who own their own taxicab. There are currently 639 taxicab licenses issued. However, 110 of those licenses are now in escrow for non-usage. Cincinnati is unique among the three cities in placing into an escrow pooi licenses that are surrendered, revoked, or not renewed. The City may also place a license in escrow due to lack of an operational vehicle. A license or licenses in the escrow pool may be reclaimed singly, severally, or totally without a showing of need and necessity. A license placed in escrow remains available for restoration to the owner for a two-year period, if the licensee has not restored the license within this two-year period, the license reverts to the City. According to regulatory personnel, escrow of licenses has mostly occurred at small companies operating 1-2 taxicabs.

Table 2.1 shows significant changes in the taxicab industry and in regulations that have occurred in Cincinnati since 1986.

Institute for TransportationResearch and Education - May 1998

10 Reviewof TaxicabRegulatoryChangesin Cincinnati,Indianapolis,and Seattle

Table 2.1: Significant Changes in the Taxicab Industry and Regulations in Cincinnati

Cn 1986 99OJ 1994 rjiIy, 1997 22 (1990) Taxicab 33 21 (1991) 40 44 Companies 20 (1992,1993) 19 independents 23 independents 8 independents

Taxicab Licenses 348 347 587 (cap lifted) 639 (cap of 348) of which 110 are in escrow

1990-91 Not Avail. Licensed Taxicab Not Available 1,30? (1992) 1,170 1,007 Drivers 1,174 (1993)

Fares Maximum Fares - Maximum Fares - Maximum Fares - Maximum Fares- Amount Not Amount Not $2 drop, $0.20 per $2 drop, $0.20 per Available Available 1/6 mile, $12.00 per 1/6 mile, $12.00 per 5 5 hour wait. hour wait, $3 minimum fare. $3 minimum fare.

Inspectors 3 3 until 1992 2 2 2 after_1993

Vehicle Safety - Safety - Safety - Mechanical - Inspections Semi-Annual Semi-Annual Semi-Annual Annual, Safety- Semi-Annual

Liability Not Available $100,000 minimum $100,000 minimum $100,000 minimum Insurance as of 11/19/88 Required

The number of licensed drivers currently fluctuates between 900-1100 (a 15% reduction from pre-deregulation levels). Applicants are examined by the director of safety or his designee as to their knowledge of the provisions of the taxicab ordinance, the geography of Cincinnati, and local traffic regulations through a written examination.

The 1994 ordinance revisions also established a minimum fare of $3 per trip reportedly due to the compact size of the City. A maximum fare structure has been in effect during the 1986-1997 period. Current maximum fares are: $2.00 drop charge, $0.20 per 1/6 mile, and $12.00 per hour waiting time. Fares for trips to locations outside Cincinnati are based on the meter rate plus a surcharge. The total fare rate charged for mileage outside the City limits must be no more than 25 cents per mile in excess of the meter rate.

The taxicab inspector was unable to provide these amounts.

Institute for TransportationResearch and Education - May 199S

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2 Review of Taxicab RegulatoryChanges in Cincinnati. Indianapolis. and Seattie

There are now 44 taxicab companies legally operating in Cincinnati with the majority of the City taxicab business held by five companies--Yellow Cab Company of Greater Cincinnati (97 licenses), Skyline Taxi (77 licenses), Towne Taxi (45 licenses), Around the Clock Taxi (48 licenses), and Veterans Taxi (21 licenses). Individual license holders are also affiliated with each of these companies—Yellow Cab Company of Greater Cincinnati (4 affiliated licenses), Skyline Taxi (1 affiliated license), Towne Taxi (21 affiliated licenses), Around the Clock Taxi (21 affiliated licenses), and Veterans Taxi (2 affiliated licenses). Twenty-three of the 44 companies possess one license, and several companies provide service primarily to suburban areas.

2.5.2 Disparity Between Services Offered By Large and Small Companies

Fleet owners were critical of the disparity between service provided by the larger taxicab companies and independent owner-drivers. The larger companies provide central dispatching, 24-hour service, and service to all areas within the City. Many independent owner-drivers primarily serve friends and repeat customers within a limited area and do not operate 24 hours or 7 days throughout the week. Suggestions to improve this situation, which were provided by both taxicab fleet owners and a regulator, include:

> Requiring provision of central dispatching (through either a company or a dispatching association); > Requiring provision of 24-hour service; > Requiring every company fleet to have a minimum number of taxicabs as a means of helping to ensure that service is available to all areas of the City; >- Requiring every company to have an office location; and Requiring drivers to log all drop locations.

The purpose of implementing these suggestions is to create an “even playing field” throughout the industry by treating all operators the same while at the same time ensuring customers that all operators meet at least a minimum level of service.

2.5.3 Service

Taxicab owners, regulators, and customers stated that there is currently a need for additional taxicabs in service at night, as shown by the difference between typical wait times during the day and at night which were cited by company owners and customers. Fleet owners reported that the average wait time for service during daytime hours is 15-20 minutes, compared to l-1-½ hours at night. The reason given for that difference is that few independent owner-drivers work at night, and those who do work nights generally provide service only to known customers. It was also reported that the reason for the lack of, taxicabs on Friday and Saturday nights is that the day business is lucrative enough that drivers do not need to drive nights. It was declared that drivers who are willing to work nights are particularly difficult to find in Cincinnati. Several customers stated that the average response time to an address in a public housing project was 45 minutes during daylight hours, but that taxicab service to that neighborhood is often not available after 5:00 p.m. This lack of service has existed for the past four years (since deregulation).

Institute for Transportation Research and Education- May (998

13 Reviewof Taxicab RegulatoryChanges in Cincinnati,Indianapolis, and Seattle

2.5.4 Driver Shortage

All the taxicab company owners interviewed cited a current shortage of qualified drivers. This is the result of the relaxing of regulations on entry to the business, which has resulted in a rather fixed supply of drivers now spread over more cabs. The difficulty of attracting new drivers to the industry is shown through price competition in the daily lease rate charged to drivers by companies. There have been periodic price wars among larger companies in an effort to attract drivers away from other taxicab companies.

Fleet owners stated that current driving record requirements and the prohibition on hiring individuals with a criminal history are excessively strict and prevent some otherwise qualified drivers from gaining work, thereby reducing the potential labor pool.

2.5.5 Other Problems Cited

Deregulation has not led to an improvement in vehicle condition. A regulator expressed the belief that additional enforcement personnel are needed at this time, since the number of enforcement personnel has remained constant for the past five years despite the increase in the number of public vehicle licenses issued. Several customers stated that the poor condition of many vehicles had not improved since the 1994 change in regulation, and service is poor on weekends and at night, especially in poorer neighborhoods. However, enforcement personnel believe that taxicabs are in somewhat better condition now than prior to the relaxation of entry, and credit this improvement to ownership of cars by independent owner-drivers. The taxicab inspector stated there has been no decrease in the number of complaints since entry was relaxed. The inspector was unable to provide the number of complaints received before and after deregulation.

The larger taxicab company owners said that the lack of a requirement for 24-hour, 7 days per week service and central dispatch has created differing expectations for service provided by independent owner-drivers compared to larger companies. As one large company owner stated, “Companies need to provide equal service. Now the four large companies provide service at their expense; other small companies eat the gravy.” Providing taxicab service late at night and early in the morning is not profitable but is generally believed to be critical to the community. A regulator believes 24-hour service should be required as a condition of receiving a taxicab license. This regulator believes that independent owner-drivers should be accorded an opportunity to operate their own business, but that the owner-drivers should be held accountable for providing service 24 hours a day. His suggestion of a means to achieve these goals was that independent owner-drivers form groups to reach some minimum required size for a company or association, an approach which Seattle has adopted (Section 4). The association would provide a means of providing sufficient taxicabs to provide 24-hour, 7-day service throughout the city while allowing owner-drivers to operate their own businesses.

One practice that existed prior to the relaxation of entry and persists afterward is taxicab drivers providing service in areas for which they do not hold valid licenses. This problem exists in the greater Cincinnati a.ea on both sides of the Ohio River in both Ohio and Kentucky. Cincinnati- licensed taxicabs, with the exception of 31 vehicles permitted to operate from the Greater

Institute for TransportationResearch and Education - May 1998

14

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of at Review of Taxicab RegulatoryChanges in Cincinnati, Endianapolis,and Seattle

3.0 Indianapolis, Indiana

3.1 Introduction

The metropolitan area of Indianapolis covers 3,532 square miles and had a 1994 population of 1,461,700. The City supports a variety of public transportation alternatives that include fixed- route bus and specialized transportation. Indianapolis implemented a significant change in its regulation of taxicabs with 1994 revisions to the City-County ordinance that allowed open entry into the taxicab business and established a maximum fare structure.

3.2 Historical Changes in Taxicab Regulation - 1970-1993

The unified City/County government was implemented in 1970; creating the Consolidated City of Indianapolis. Taxicab regulation was placed in the Controller’s Office. Until the late 1960s, there were 423 taxicabs licensed in Indianapolis. Prior to 1970, the City taxicab ordinance had limited the number of taxicab licenses available by a population ratio of one cab per thousand population. In 1970, that limit was replaced with a ceiling of 600 taxicab licenses. Both prior to and following the 1970 change in the maximum number of licenses to be issued, taxicab licenses were issued based upon a finding of public convenience and necessity. In 1972, 502 taxicab licenses were issued. Red Cab held the majority—approximately 400—of these licenses. Four other companies held approximately 90 licenses, and independent owner-drivers held 10 licenses.

By 1972, Red Cab was experiencing financial and service problems. In 1973, company employees went on strike against the company, and Red Cab entered bankruptcy and ceased operations in August 1973. City officials became concerned about the condition of the local taxi industry as a result of Red Cab’s problems. As Red Cab deteriorated, city officials suspected that many licenses were inactive. To curb this practice and to ensure that only active taxicabs were licensed, vehicle inspections were required every 30 days, and licenses of vehicles inactive for over 60 days were revoked.

The taxicab ordinance had stipulated that the City could revoke any permit not in use for over 60 days. This provision was the basis for the revocation and reissuance of permits. The Controller revoked 255 licenses during 1973. Taxicab licenses were redistributed at two periods during 1973 through administrative actions of the Controller’s Office. The first redistribution took place in April-May of 1973, when 125 revoked licenses were reissued to new applicants. Ninety-four additional revoked licenses were reissued in April 1974.

All the available licenses were not requested. During the second period of reissuance in April 1974, a total of 466 licenses were issued, compared to the 502 licenses that had been issued in April 1973. There was only one new entrant to the taxicab business through these two periods of reissuing licenses. The other 33 recipients of taxicab licenses were individuals from within the taxicab business, many of whom were taxicab drivers. Requirements to provide 24-hour dispatch and to maintain a downtown office were retained but not enforced. There was no

Institute for Transportation Research and Education . May 1998

17 requirement twenty-nine issue In potential In was City/County 3.3 licenses. Controller’s that The represents applications government when municipal Study were deregulating principles for market for was industry Government structure

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opportunity for government officials both to advance their economic and entrepreneurial philosophy and to respond to pressure to increase minority business ownership.

Supporters of taxi deregulation included the Chamber of Commerce, the Indianapolis Urban League, the Hoosier Minority Chamber of Commerce, the Indianapolis Recorder, downtown hotels and banks, and some medical providers to the elderly. Supporters believed that deregulation would increase the level and quality of taxicab service, reduce fares, and provide small business start-up opportunities. “Proposal 72 was introduced to improve customer service and increase economic opportunity in the local ground transportation industry. In some areas of the city, there is little or no service and the service is not of high quality. This proposal gives everyone an opportunity to 7benefit.” The improvements to be realized from implementing City Council Resolution 72, as cited by the Regulatory Study 8Commission were: >- “Open Market Entry: The proposal (would) lift the arbitrary cap on the number of allowable taxis. Price Competition:, Operators may charge•whatever they want below the existing ceiling, meaning the proposal will allow prices to fall, but not rise above the maximum ceiling. - Job Opportunities for Indianapolis Minorities: Disproportionately, the Indianapolis black community is the demographic segment that both depends upon taxis the most, and ... can benefit the most from an opening up of that industry. The people who want and are denied the chance to own their own cabs are overwhelmingly African-American. It is not inconceivable that adoption of Proposal 72 could lead to 100 new black-owned businesses in the first six months. ‘ An Improved Local Ground Transportation Infrastructure: An unreliable and expensive taxi industry hurts retail, restaurant and convention business. An improved taxi industry will have a positive impact upon the entire community. >- Allowing the Creation of a Local Jitney Industry: This provision is extremely important to transit dependent people who can not afford the high price or unreliable service of local taxis. In addition, this provision would not only increase employment opportunities by enabling more people to get jobs, it would create jobs and business opportunities in its own industry.”

Proponents of opening entry indicated that applicants for taxicab licenses were prohibited by existing regulations from starting their own businesses. In August 1992, the City Controller had attempted to award 39 new taxicab licenses by lottery. That action was blocked by a lawsuit brought by license holders that contended the controller didn’t follow established procedure.

A review of the taxicab ordinance shows that it did not prohibit single-vehicle taxicab companies or stipulate a minimum number of vehicles for a taxicab company. The issue was really that

‘ Tom Rose, Assistant to the Mayor for Regulation Affairs, as quoted in The Indianapolis Recorder. Saturday, March26, 1994. 8 “City County Council Proposal 72: Improving the Local Ground Transportation Marketplace,” Mayor Stephen Goldsmith’s Regulatory Study Commission, March 31, 1994.

Institute for Transportation Research and Education. May 1998

19 Reviewof Taxicob ReguIaozy Changes in Cincinnati.Indianapolis,and Seattle regulators had not issued additional licenses to applicants. While 392 licenses were issued, the Controller’s Office could have issued up to a maximum of 600 licenses. Licenses were issued based on a finding of public convenience and necessity. Regulators did not see a need for additional licenses based on a finding of public convenience and necessity and maintained the number of licenses at a constant level.

All fleet operators opposed the proposed deregulation, arguing that consumer price gouging would result, quality of service would decline, that some taxicab companies would be forced out of business, and that drivers were being misled to believe that taxi service is easy and inexpensive to provide.

3.4 Key Provisions of Regulatory Changes -4994

Prior to implementation of Proposal 72 on July 1, 1994, entry to the taxicab industry was regulated by the need to prove public convenience and necessity, and the City of IndianapolisfMarion County set fares.

The City/County Council voted to adopt Proposal 72 in May 1994, and revisions to the taxicab ordinance became effective in July 1994 allowing open entry and changing to a maximum fare structure. The proposal made these major changes to the taxicab àrdinance:

> Eliminated the cap of 600 taxicab licenses; Replaced a set fare rate with a maximum rate, although all rates must be posted outside the taxi and with the local government; Eliminated the 24-hour service and central dispatch requirement allowing companies to operate part-time; Lifted the prohibition against hailing a cab; - Added licensing requirements for limousines (previously licensed by the State); >- Changed inspection of limousines and jitneys—two mandatory annual safety inspections plus up to three surprise safety inspections where warranted by citizen complaints; > Increased the permissible operating life of taxicabs from 5 to 6 model years maximum; limousines and jitneys allowed a ten-year maximum vehicle operating life; ‘- Changed insurance requirements—increased the minimum liability insurance for taxicabs from $100,000 to $300,000, but reduced the required minimum for limousines from $1,500,000 to $300,000; > Increased the annual license fee to better defray costs of issuing and administering licenses—for taxicabs and limousines from $102 to $152; for jitneys from $25 - $50 to $152; - Set maximum mileage and wait time rates; and > Implemented a maximum “pick up” charge similar to a meter drop charge.

The number of taxicab stands in the downtown area was reduced from 35 to 8. It was perceived that some taxicab stands were taking space that could be better used for parking. A business organization stated that the need for taxicabs to wait in line at stands created traffic congestion

Institute for Transpotation Research and Education - May 1998 20 ReviewofTaxicabRegulatoryChanges in Cincinnati,Indianapolis,and Seattle

on some downtown streets, and that organization now states that the congestion no longer exists. It is impossible to state that the elimination of the requirement for taxicabs to pick up customers only at stands in the downtown area was totally or partially responsible for this change.

It should be noted that while the 1994 ordinance deregulated the taxicab industry, it actually began the municipal regulation of the limousine industry, requiring licensing of limousine and jitney operators and requiring inspections of limousines and jitney vehicles as well as taxicabs. The current ordinance (Chapter 996: Public Vehicles For Hire) applies to taxicabs, limousines, and jitneys.

Table 3d: Significant Changes in the Taxicab Industry and Regulations in Indianapolis

:Pfriorto197344 After 1974 Prior to Open Red1stribuUon Redistribution Entry in 1994 j996 Current ‘ of Permits of Pernuts

10 36 29 123 106 Taxicab Companies (5 Co.’s, (4 Co.’s, (3 Co.’s, (83% one or (2 major co.’s, 5 Indep.) 32 Indep.) 26 Indep.) two cab 104small Co.’s operations) and indep.) 502 466 392 460 372 Taxicab Licenses Cap at 600. Cap at 600. Cap at 600. No cap. Na cap. (492 major—302 (0 Red Cab, 151 (201 Yellow, (172 Yellow, (173 Yellow, Red Cab, 51 Yellow, 158 66 Indep., other co.’s and 20 Hoosier, Yellow, 139 other firms, 157 other Co.’sNot independents 179 Indep.) other firms; 10 Indep.) Available) Not Available) Indep.)

Licensed Taxicab Not Available Not Available Not Available Not Available Not Available Drivers* 631 (1992) $0.95 drop, Pick-up charge Pick-up charge Fares Records Not Records Not $0.30 per 1/5 (amount not (amount not Available** Available** mile, $0.30 per specified), plus specified), plus minute wait $0.40 per 1/5 $0.40 per 1/5 after jS 3, mile, $0.40 per mile, $0.40 per $6.50 mm. minute wait, minute wait, Airport. $5 downtown $5 downtown flat fare. flat fare.

Inspectors 1 1 1 1 1

Safety - Safety—3 per Safety—2 per Safety—2 per Vehicle Inspections Not Available 4 per year; year; Meter— year plus up to year plus up to meter —monthly 3 per year. 3 unscheduled, 3 unscheduled, Meter—.2-5 Meter—2-5 per year. per year.

Minimum Liability Not Available Not Available $100,000 $300,000 $300,000 Insurance

*Information unavailable on number of licensed drivers due to the method of record keeping. Controller’s Office

Institute for Transportation Research and Education - May 1998

21 drivers. record tracks year woman-owned. The applications decreased the **Information from However, operators. operate attribute number the transportation Prior entry, limousine currently. While 1998, The keeping believes renewal to Complete of of shown limousine

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as Reviewof Taxicab Regulatory Changes in Cincinnati, Indianapolis,and Seattle

After July 1, 1994, fares were subject to the following maximum amounts:

>- 1994: An undefined base rate plus 33 cents per each 1/5 mile, extra passenger 55 cents, 33 cents per minute wait charge. >- 1995: Base rate plus 36 cents per each 1/5 mile, extra passenger 60 cents, 35 cents per minute wait charge. 1996 and after: Base rate plus 40 cents per each 1/5 mile, extra passenger 65 cents, 40 cents per minute wait charge.

One should note that no fixed or maximum charge is specified for the base rate for 1994 through the present. Each company establishes its base rate. Fares may not be changed more than once each calendar quarter. Current base rates range from $1.25 to $5.00. The two largest companies, as well as most independents, charge a $1.25 base rate.

A flat fare of $5 is now an option for travel within the downtown area. Customers may request that the meter be used instead, which in many cases results in a lesser expense, due to the compact size of the downtown area.

Historical information on the median base rate is not available; the Controller’s Office does not track median rates or calculate them on an annual basis. This is due to the difficulty of compiling and computing such statistics due to the frequency of taxicab companies entering and leaving the market.

The number of taxicab inspectors has remained at 1 since 1994. Both vehicle safety and meter inspections were required 3 times per year prior to July 1, 1994. Vehicle safety inspections are currently required to be conducted only semi-annually.

The minimum liability insurance requirement prior to July 1, 1994 was $100,000. Effective July 1, 1994, the minimum liability requirement was increased to $300,000.

3.5 Impacts of the 1994 Regulatory Change

There are differing opinions on the success of the most recent open entry in Indianapolis. The three greatest objectives cited by regulators, fleet owners, drivers, and business and hospitality organization representatives to be realized from deregulation of the taxicab industry were:

To increase business opportunities for those desiring to operate their own taxicab businesses, particularly members of minority populations; To improve customer service; and To open the for-hire transportation market to a variety of service options.

The first objective initially appeared to be partially accomplished, as shown by the increase in the number of taxicab operators and the initial growth in the number of permits issued through

Institute for Transportation Research and Education May 1998 23 Review of Taxicab RegulatoryChanges in Cincinnati, Indianapolis,and Seattle

1996. However, the more recent decrease in the number of taxicab permits and taxicab operators does not support accomplishment of this objective. It should be noted that this objective is not a transportation objective.

Opinions vary as to the success in accomplishing the second objective. Business and hospitality organization representatives that supported deregulation believe that (at least initially) overall customer service had improved, as shown in the following statements.

“Within 6 months of deregulation, the city reported 32 new companies had started, three quarters of which were owned by minorities or women. Pick up rates were 12% lower for new companies compared to existing companies. Average mileage rates were 3% lower, and the average rate for the first mile was 7% 9lower.” Eight months following deregulation, Indianapolis Downtown, Inc. (IDI) supported “the Council’s ongoing support of taxi ordinance 76 (sic). Through deregulation, we’ve recognized improvements in the following areas:

>- Increased the number of individual taxicab owners/entrepreneurs. > Improved visibility of rate by posting on outside of taxi. - Improved quality standards. Newly licensed taxis are clean and well-maintained. >- Improved access to taxis. Customer/visitors can now “hail” a cab. - Opened market to more limousine service.”

“DI believes a deregulated taxicab industry is essential to its ultimate success as an affordable and efficient people mover. The positive market forces from deregulation are evident. However, taxi cabs in Indianapolis have yet to reach their highest potential as an everyday mode of transportation for our Citizensand ”0visitors.’ However, IDI also recommended three changes to improve customer service. Those changes included elimination of the $5.00 “Downtown zone” fare, moving a taxi zone, and incorporating a “requirement to place a window slick inside the back seat taxi window which says “Thank you for visiting Indianapolis.. .1-low’smy service? 327-541 A spokesperson for Indianapolis Downtown, Inc., stated that none of these recommendations has been implemented. DI has not commented since the number of taxis fell below pre-deregulation levels, but local fleet operators stated that the reduction in total number of taxis is an objective measure of the decline in customer service being provided to the citizens and visitors to Indianapolis.

Regulators are unsure if customer service has improved since 1994, as the City/County does not maintain a historical record of the number of complaints recorded. A regulator stated that the number of complaints has increased. However, most of these complaints involved customers’ perceptions of having been charged an excessive fare. Checks by the taxicab inspector have

Ordinance 72 Update, Regulated Competition in the Indianapolis Ground Transportation Marketplace, Economic Development Committee, January 19, 1995. Froma letter written by Helen L. Brown, Director, Management Services, Indianapolis Downtown, Inc. to Dr. Philip Borst, Councilman_25th District, dated March 21, 1995. Ibid.

institute for Transportation Research andEducation - May 1998 24 Review of Taxicab Regulatoiy Changes in Cincinnad, Indianapolis,and Seattie shown that in most instances, fares were charged correctly. With the maximum fare structure, trip fares can vary depending upon the fare charged by a particular operator. The second most prevalent type of complaint is that a driver did not know a destination address or took an excessively long route.

To respond to these complaints, the taxicab inspector modified the driving test in 1997 to determine better a driver’s ability to locate specific addresses. Driver applicants are now asked to drive to one or more street addresses as opposed to a hotel or attraction. One regulator believed that there has been no change in service to poor, minority neighborhoods and to individuals with disabilities. Taxicab company owners stated they did not believe service quality had improved since open entry was implemented.

In terms of meeting the third objective, opening the for-hire market to additional service options, there are now fourteen limousine companies in operation. Regulators and airport staff stated there is increased competition from limousine service at the airport. Paratransit services have also been deregulated; regulators speculated that unlicensed neighborhood jitneys may offer increased levels of service in some areas. No jitney companies are or have been licensed by the city. However, at least one medium-sized taxicab company and numerous independent owner- drivers have left the taxicab industry in Indianapolis within the past three years.

3.5.1 Market Share

There was, and continues to be, extensive competition in the taxicab market. The number of taxicab companies operating in Indianapolis increased threefold following the periods when permits were redistributed in 1973-74. In April 1972, ten taxicab companies operated in Indianapolis—nine companies (A Cab, Duncan Cab, 3 Cab, Lawrence Cab, Northside Cab, State Cab, Yell-O-Taxi, Yellow Cab, Yello Taxi) plus one independent dispatching association. In April 1974, 36 companies were in operation—4 large finns plus 32 independent owner-drivers.

The number of taxicab companies remained relatively stable through June 1994, when 29 companies were in operation. The three largest companies at that time were Yellow Cab (201 licenses), Metro (41 licenses), and Hoosier (50 licenses).

Following adoption of Proposal 72 in July 1994, the number of taxicab operators initially grew to 45 companies. Currently, 106 companies provide taxicab service in Indianapolis/Marion County. The largest company is Yellow Cab (172 licenses). Other companies include Yell-O Cab, Hoosier Cab, Union Cab, Budget Cab, Airline Cab, Reliable Cab, and Al Taxi. There are now approximately 30 companies that operate only one or two taxicabs.

The number of active licenses now issued (372) is less than the total number of licenses issued in April 1974 (466). The number of licenses has fluctuated throughout the past 25 years, reflecting both changing regulations and changing conditions in the private, for-hire transportation industry. For example, in November 1979, 360 licenses were issued (Yellow Cab—156, Northside—71, consortium of State Cab/ Metro Cab/Carver Cab/several independents—68, other independent owners—65). In June 1994, prior to implementation of the revised ordinance, the number of taxi licenses was capped at 600 and there were 392 licenses issued (Yellow—201,

Institute for Transportation Research and Education - May 1998 25 Reviewof Taxicab RegulatoryChanges in Cincinnati Indianapolis,and Seattle

Metro—49, J-Ioosier——42).

3.5.2 Taxicab Company Business Failures

Some taxicab companies, particularly those with 20-50 licenses and which provided 24-hour, 7- day, radio dispatch service, were placed in a position in which they did not have sufficient resources to compete effectively with Yellow Cab and the independents for business. Those companies were not able to provide service effectively throughout the entire area and at all times of every day. Medium-sized companies also lack the flexibility and low operating costs enjoyed by independent owner-drivers. The exit of Northside Cab Company (the third largest fleet) from the taxicab business was attributed to conditions resulting from provisions of the 1994 ordinance. Yellow Cab and Hoosier Cab are the only companies now providing radio dispatch and service to all areas of the City. The owner of another company that has been in business for ten years is now considering closing that business due to lack of profitability.

Several owners and regulators stated that many taxicab businesses started by individual owner- drivers have failed within one year of start-up. Some regulators who advocated deregulation admit that success has not been as positive as had been hoped, citing the many companies entering and leaving the market. Some of these business failures were attributed to the inability of some independent owner-drivers to replace their single vehicles when they reached their maximum age threshold of six model years.

3.5.3 Fares

According to fleet owners, deregulated fares cause confusion with customers. Visitors arriving at the airport are directed to the first vehicle in the taxicab queue. Visitors may not realize that fares can differ among taxicab companies.

Several regulators and representatives of the business community believe that the $5 downtown fare should be abolished in favor of a return to using metered fares. Metered fares are less expensive than $5 for many trips within the downtown area, and the use of metered fares would result in cost savings for many customers. Interestingly, Indianapolis Downtown, Inc., which had advocated implementation of a Downtown Zone in 199412 reversed that position in 1995, and recommended charging by the meter within the downtown 3area.’ An airport representative said that fares have increased since they were deregulated. A study of fares done two years ago (after deregulation) showed Indianapolis among the 15 most expensive cities in the US for taxicab fares. As a result, airport staff stated they may investigate the feasibility of requiring lower fares for trips originating at the airport.

An examination of inflation-adjusted fare amounts shows that fares have risen a faster rate than the Consumer Price Index (CPI) for the 1993-1996 period. The cumulative increase in the CPI

12 From an attachment to a letter from Helen L. Brown, Director, Management Services, to Dr. Philip Borst, CounciJman,dated March 28, 1994. Letter from Helen L. Brown, Director, Management Services, to Dr. Philip Borst, Councilman, dated March 21, 1995.

Institute for Transportation Research and Education - May 1998 26 Review of Ta,ticab Regulatory Changes in Cincinnati, Indianapolis.and Seattle was 8.6 percent for the period. Using this multiplier, the 1993 fares of $0.95 base rate, $1.50 per mile, and $18.00 per hour wait time would increase to $1.03 base, $1.63 per mile and $19.55 per hour wait in 1996. This is significantly less in all categories than the 1996 actual prices of $1.25 base rate (typical charge used by most operators, although this rate varies from $1.25 to $5.00), $2.00 per mile, and $24.00 per hour wait.

3.5.4 Qualified Drivers

Indianapolis, similar to Cincinnati, is enjoying a period of economic growth and low unemployment. In addition, many drivers for larger companies have started their own taxicab businesses. Owners of two of the larger companies in Indianapolis cited difficulty in acquiring sufficient numbers of qualified drivers. There is a relatively fixed pool of taxi drivers that is now serving a greater number of companies. Regulators acknowledged this problem. In 1994 alone, 40 Yellow Cab drivers started their own businesses. Another company owner mentioned the loss of approximately one-third of that company’s drivers over the past three years, stating many of those drivers had become independent owner-drivers.

3.5.5 Other Problems Cited

It has been reported in the media that some drivers are unable to communicate effectively in the English language and are unable to comprehend customer requests.

Regulators and two taxicab company owners believe the lack of requirements for radio dispatch, 24-hour, 7-day service, and a central office location have resulted in the creation of a two-tier system of service. Larger companies provide service to all areas of Marion County at all times, and independent owner-drivers provide service at times and to areas at the discretion of individual drivers. A regulator also stated that the lack of a requirement in the taxicab ordinance for a central office location has made it more difficult for enforcement personnel to contact taxicab operators.

Finally, company owners believe that the lack of hiring additional enforcement personnel concomitant with the initial increase in the number of licenses resulted in insufficient enforcement activity. The Controller’s Office is now responsible for administering and enforcing regulation of limousine and jitney companies in addition to taxicab companies.

Institute for Transportation Research and Education . May 1998 27 Review of Taxicab Regulatory Changes in Cincinnati, Indianapolis, and Seattle

4.0 Seattle, Washington

4.1 Introduction

The City of Seattle covers 84 square miles and had a 1995 population of 532,900. The Seattle metropolitan area (King, Kitsap, Pierce, and Snohomish Counties) contained 3,020,000 people within a 6,300 square mile area. The City supports, though a regional transit authority, a variety of public transportation alternatives that include fixed-route bus, specialized transportation, and light rail. In 1979, both the City of Seattle and King County opened entry and allowed taxicab companies to set their own rates. Seattle permanently closed entry in 1991; King County followed in 1992. In 1996, the City of Seattle revised its ordinance to implement a minimum standards taxi regulatory approach.

4.2 Historical Overview of Taxicab Regulatory Changes - 1979-1996

Prior to 1979, King County and Seattle each regulated both taxicab entry and rates. Entry was restricted according to a population ratio, and the City and County Councils set rates. In 1976, King County, the City of Seattle, and the Port of Seattle embarked on a program to regionalize taxicab regulations and licensing. The intent was to standardize fees and regulations, enforcement, and rate review procedures while maintaining adequate service levels throughout the county. For example, the County and the City allowed reciprocal licensing for vehicles and drivers.

In 1979, the County and the City passed ordinances opening entry and deregulating fares. Deregulation resulted in problems peculiar to each jurisdiction. For example, the airport had a surplus of taxicabs arid problems with taxi drivers refusing short fares and poor conditions of taxicabs. The County and the City found that open rate setting resulted in severe abuses as evidenced by one company filing a $10 drop, $50 per mile charge. Each jurisdiction passed ordinances or implemented procedures to address these unique concerns. However, the variance in rates among different taxicab operators created consumer confusion resulting in a consumer perception of price gouging. It was not unusual for a traveler to pay a different return fare for transportation between the airport and downtown. Many taxicabs were also perceived to be in poor condition (Zerbe, 1983; Lewis, 1995; GeIb, 1983a).

In 1984, in response to these problems, the County returned to regulated entry by placing a moratorium on the issuance of new taxicab licenses and returned to setting taxi rates by ordinance. The City maintained open entry but limited fares by implementing a taxi rate ceiling. The County’s entry moratorium expired in 1985, returning the County to open entry; however, fares continued to be set by ordinance. Also, in 1985, the Port placed a moratorium on the issuance of permits to operate at Sea-Tac Airport. This was because the number of airport permits had grown to 236, a number that airport staff deemed excessive. Airport staff stated that there was confusion among customers from the variance in fares, the poor condition of taxicabs, and poor customer service that resulted from deregulation. The airport, as a major market, had attracted a great number of taxicabs, creating long waits for drivers between trips. The airport

Institute for Transportation Research andeducation - May 1998 29 implemented

transportation improve was Hoc at at optimum licensed work response establish Second, financial data. King

A Seattle, was recommendations County and recommendations drafted in

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in Review of Taxicab Regulatory Changes in Cincinnali, Indianapolis, and Seattle

The impetus for this change to greater regulation came from the tourism and hospitality industries. Both the hospitality industry and City regulators stated there was a lack of control over taxicabs. Fare rates were not standardized and could be set at excessively high levels, some drivers lacked English language skills, some drivers lacked sufficient geographic knowledge to drive customers to requested destinations, and some drivers refused short trips.

In August 1995, King County and the City of Seattle entered into an interlocal services agreement. This granted authority for the County to issue City of Seattle for-hire driver’s licenses as an agent for the,City, and for the City to issue County taxicab vehicle licenses as an agent for the County. In addition, the agreement granted authority for County licensing inspectors to enforce the City taxi code as agents for the City and for City licensing inspectors to enforce the County taxi code as agents for the County. This specialization allows licensees to apply to only one agency to obtain both licenses.

4.3 Motivations Leading to Additional Regulation in 1996

By the mid 1990s, several downtown businesses, such as the Westin Hotel and Clipper Navigation, and organizations representing business and tourism interests requested increased regulation of taxicabs. Spokesmen for the business and tourism industries indicated that many taxicabs were in poor condition, some drivers lacked geographic knowledge of the City, some passengers with short trips were refused service, and some foreign guests were not transported via the shortest possible routes. Passengers complained that fares were inconsistent, i.e., one fare was charged from the airport to a given hotel and another fare was charged on the return trip to the airport. In addition, some drivers were reported to lack English language skills. The mayor and several council members were supportive of a more cooperative and coordinated regulatory effort between the County and the City. Some members of the taxicab industry also believed additional regulation would be beneficial to the industry.

These problems were determined by the City to be artifacts of the 1979 open entry, after which many independent owner-drivers entered the Seattle taxi market. Despite the various steps taken by the city, county, and airport to re-impose entry restrictions, there were in 1995 approximately 210 independents and 7 companies operating in Seattle. Most of these operators had no place of business and could not easily be located by the one on-street taxi inspector. Recognizing the magnitude of the service and enforcement problem it faced, the city brought in a peer review team of current and former taxi regulators from other cities. This team issued a report that called for increased self-enforcement by the industry (Avants et al., 1995). The ordinance enacted by the city in 1996 implements the recommendations of the peer review team.

4.4 Key Provisions of the 1996 Regulatory Changes

In fall 1996, the City of Seattle changed its taxicab regulations effective January 1, 1997. The City ordinance contains some new requirements that move the city significantly toward tighter control over service quality and greater industry self-enforcement. Most significantly, taxicab license holders are now required to belong to associations, associations are required to meet

Institute for Transportation Research and Education - May 1998

31 service only dispatch a least for must: without It

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of Review of Taxicab RegulatoryChanges in Cincinnati, lndianapoh, and Seattle

Table 4.1: Significant Changes in Taxicab Industry and Regulations

J During Period Prior to W Criterion jtOpe .fOpen Entry Limiting Entry Current In I73 41979-19s4) in 1991 Taxicab Companies or 7 Companies, Associations 57 —80-85 210 10 Associations independents 421 City —520City City Not 645 City, Taxicab Licenses 402 County 426-648 County Available, —850County 561 in County (includes Co. only and combined Co./City 166 Airport 1,865 Total 446 Co. only Licensed Taxicab Drivers Not Available Not Available 1329 Total 818 Co. w/ City Endorse. 601 City only (Drivers may affiliate w/up to 3 assoc.) County: $0.90 County: $1.00 County: $1.20 City/County: drop, $0.70 per drop, $1.20 per drop, $1.40 per $1.80 drop, $1.80 per Fares mile, $0.12 mile, $0.30 wait mile, $0.35 wait mile, $0.50 wait per wait per per minute, per minute, minute, $0.50 extras minute. $0.50 extras. $0.50 extras over 2. over 2. Inspectors Not Available Not Available I City 1.5 City I County I County Safety: 2 per Mechanical: Annual, by Vehicle Inspections Not Available Not Available year; ASE certified mechanic; Meter: once per Safety: up to 3 per year; year. Meter: once per )ear. Minimum Liability Not Available Not Available Not Available City: $50,000/accident; Insurance Required $25,000/person; $50,000 property.

There was one taxicabassociationin operationprior to implementation of the revised Seattle and King County ordinances in 1991. The Seattle Tacoma International Taxicab Association (ST1TA) served as a model for the taxicab associations now required in the City of Seattle. The City has changed from regulating 106 companies and independent owner-drivers prior to January 1, 1997 to ten associations to enhance control and service.

The number of vehicle licenses increased throughout the period from 1979 to the present. Exact numbers of vehicles licensed in each jurisdiction are not available for all periods. Also, some vehicles are licensed for operation only in King County. Other vehicles are licensed for operation only in the City of Seattle. Some vehicles carry joint licenses. In addition, vehicles. licensed to operate at Sea-Tac International Airport may be licensed to operate in either or both of the other two governmental jurisdictions. Compounding this confusion, under the interlocal service agreement of August 1995, King County now performs all driver licensing, and the City of Seattle now performs all vehicle inspections for both jurisdictions. There are currently 645

Institute forTransportation Research and Education - May 1998 33 Review of Taxicab Regulatory Changes in Cincinnati, Indianapolis.and Seattle

City-only licenses, approximately 850 County-only and combined City/County licenses. Of the 166 Airport licenses currently issued, 13 have City endorsements; the remainder have County endorsements.

The same inter-jurisdictional conditions apply to driver licensing. There are a total of 1,865 taxicab drivers now licensed. Of that total, 446 have County only licenses, 601 have City-only licenses, and 818 have County licenses with a City endorsement.

Uniform fares now apply to both King County and the City of Seattle. Both the City and the County deregulated fares in 1979, allowing taxicab drivers to set their own rates. In 1984, the County returned to established fare rates, and the City created a rate ceiling. The City adopted its ceiling rate as the established fare rate through the 1991 ordinance. In 1992, the City and County fares became identical. Note that this uniform rate is a result of circumstance, not a requirement of current regulations. City and County officials expressed the belief that a common fare rate is likely to become adopted as part of both ordinances in the near future as part of continuing efforts to coordinate taxicab regulation in the area.

Both the City of Seattle and King County have typically employed 1-2 taxicab inspectors during the past 20 years. There are currently one County Inspector and 1.3 City Inspectors, with plans to hire another City inspector at 50% time.

A semi-annual safety vehicle inspection was required for both City- and County-licensed vehicles until 1995. At that time, an annual safety inspection performed by an ASE-certified mechanic became an additional requirement. Up to 3 safety inspections may be performed on vehicles in one year, based upon violations cited at the initial inspection. Taximeters are inspected annually. The City under the auspices of the 1995 interlocal service agreement now performs all vehicle inspections for both the City and the County.

Current requirements for vehicle insurance coverage are a minimum of $50,000 per accident, $25,000 per person, $50,000 property damage. These requirements have not changed for several years. Certificates of Insurance must now include coverage for underinsured motorists ($25,000 per person, $50,000 per accident).

4.5 Impacts of the 1991-1996 Regulatory Changes

4.5.1 Taxkab Associations

City regulations effective January 1, 1997 required all City-licensed taxicabs to belong to a taxicab association as of May 1, 1997, effectively ending autonomous operation by independent owner-drivers. Independent owner-drivers may still own and/or operate taxicabs in Seattle but must be members of an association. A “Taxicab Association” is defined as “a person or organization licensed . . . that represents or owns at least 15 taxicabs licensed by the City that use the same color scheme, trade name, and dispatch services. An individual person may be a taxicab association as long as that individual owns or represents at least 15 taxicabs and

Institute for Transportation Research and Education May 198 34 Review of Taxicab Regulatory Changes in Cincinnati, Indianapolis.and Seattle otherwise meets the requirements of (the City taxicab 4ordinance)” Taxicab associations provide a mechanism for increased supervision of drivers, for making taxicab service more customer-focused, and for enabling taxi operators to grow according to how . the and well they serve the public. They also bear some responsibility for conduct performance of their member taxicabs. Taxicab associations are assessed penalty points for specific violations of the ordinance, vehicle, and safety standards. Violations are classified according to three levels of severity. Class A violations are the least severe, and involve violations of vehicle standards, such as failure to carry a map of Seattle and the region published within the last two years, or operating requirements, such as failure to maintain a business telephone in working order during all hours of operation.

Class B violations are moderate in severity, and involve infractions of vehicle safety standards, and lack of adherence to procedural requirements for associations. Class C violations are‘. the most severe, and include operating without a valid vehicle insurance policy or valid licenses

Monetary penalties are assessed against a for-hire driver or the owner of a taxicab or for-hire vehicle for each Class A, B, and C violation found away from the City’s inspection facility. These monetary penalties range from $30 for the first Class A violation in a year to $1,000 for all Class C violations. A vehicle re-inspection fee is assessed against a for-hire driver or the owner of a taxicab or for-hire vehicle for each Class A, B, and C violation found at the City’s inspection facility. Penalty points are assessed against the driver or vehicle owner’s taxicab association for all violations. Penalty points range from 2 points for the first Class A violation against an affiliated driver or vehicle owner in one year, to 20 points for all Class C violations by an affiliated driver or owner.

In addition to accumulating penalty points for violations attributed to affiliated drivers and owners, associations may also be assessed penalty points for violations attributable to association actions. If an association accumulates more than 5 penalty points per affiliated vehicle, on average, it must pay a penalty of $100 per affiliated taxicab. An accumulation of more than 7 points per affiliated vehicle, on average, results in an additional penalty of $150 per affiliated taxicab. An accumulation of more than 10 points per affiliated vehicle, on average, results in an additional penalty of $250 per affiliated taxicab. Penalty points are accumulated on an annual basis, according to a September 1 through August 31 schedule.

4.5.2 Market Share

There are now a total of ten taxicab associations operating in the City of Seattle. In addition to ST1TA (166 licenses), associations now include: Emerald City Taxi (20 licenses), Farwest Taxi (117 licenses), Graytop Cabs (123 licenses), North End Taxi (24 licenses), Northwest Taxi (20 licenses), Orange Cab (99 licenses), Redtop Taxi (15 licenses), Royal Taxi (38 licenses), and Yellow Cab (176 licenses).

SeattleMunicipalCode,Chapter6.310.1IOV, October21, 1996. ‘ Refer to Seattle Municipal Code, Sections 6.310.320 and 6.310.330for complete details of violations and their classification.

Institute for Transportation Research and Education. May 1998 35 operating 4.5.3 There given the from independent 4.5.4 An will received, August County King all The Under to requires association,

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provide

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taught

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and required

numbers

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in Review of Taxicab RegulatoryChanges in CincinnaEi,Indianapolis.and Seattle

5.0 Discussion: Cross-City Comparisons

5.1 Introduction

Three questions form the basis for this study:

1. What were the taxi regulatory changes that occurred in each city? 2. What were the motivations for these changes? 3. What have been the impacts of these changes?

Based on the findings in the previous three sections we can now discuss how the answers to these questions vary among these three cities. Later, in Section 6, we draw conclusions about taxi regulatory changes in these three cities.

5.2 What Taxi Regulatory Changes Occurred?

The regulatory changes made by Indianapolis and Cincinnati are similar to each other and to the regulatory changes enacted in 1979 in Seattle. However, these changes are nearly opposite to those recently made in Seattle.

Indianapolis adopted open entry, deleted its requirements for twenty-four-hour service, removed its requirement for radio dispatching, removed its prohibition on hailing taxis, increased the maximum age of taxicabs from five to six years, and established maximum fare rates. Cincinnati adopted open entry through an extremely lenient public convenience and necessity regulation in which any applicant can obtain a taxi license just by stating where the applicant intends to provide service. The Cincinnati system explicitly prohibits the city from considering any impacts on existing operators in granting new licenses. In addition, Cincinnati removed its cap on the number of licenses and eliminated its requirement for twenty-four-hour service while imposing a minimum ($3) fare on trips.

Seattle, on the other hand, continued to move away from its earlier open entry experiment and increased regulation by requiring all cabs to be affiliated with an association, by requiring a minimum of fifteen cabs per association, and by requiring twenty-four-hour service and radio dispatching. The requirement for radio dispatch can be met by use of a mobile radio telephone service until December 31, 1999. After that date, the requirement can only be met by two-way radio communication, to ensure use of central dispatch through each association.

Cincinnati and Indianapolis are clearly similar in their taxicab regulatory changes. Both effected open entry, although Cincinnati did so by retaining its public convenience and necessity clause but making it extremely easy to meet this standard. Both cities also reduced service requirements for taxicab operators by deleting their requirements for twenty-four-hour service,. for dispatching, for a place of business, and for all-city service. Curiously, however, Cincinnati also moved toward increased regulation by establishing a minimum fare for taxi trips. Indianapolis relaxed its maximum vehicle age requirement from five to six years.

Institute for Transportation Research and Education - May 1998 39 Review of Taxicab Regulatory Changes in Cincinnati, Indianapolis, aiid Seattle

Seattle provides an interesting counterpoint as well as an indication of what can be expected to occur in Indianapolis and Cincinnati. Seattle in 1979 implemented deregulation not dissimilar to the changes recently enacted in Cincinnati and Indianapolis. The recent changes in Seattle’s taxi regulations can be seen as a continuing move toward re-regulation in response to service and enforcement problems emanating from the earlier deregulation experience. Given the pattern that Price Waterhouse (1993), Teal (1987), and others have noted in deregulation experiences, one can expect that both Indianapolis and Cincinnati will experience service problems that will lead them to re-regulate their taxis.

5.3 What Were the Motivations for These Changes?

The motivations leading to the taxicab regulatory changes in these three cities differ considerably.

In Seattle the impetus for the 1996 changes stemmed directly from concern among the business and tourism communities that taxi services were of poor quality and were an important detrimental factor in the attractiveness of Seattle as a tourism and business destination. These groups believed that the taxi industry should either be more strongly controlled by the city or else more self-regulated, hence the requirements for affiliation with associations, for twenty-four- hour service, and for a point system for rule infractions.

While these industry concerns led directly to the City’s increased taxi regulation, these concerns were but a step in the continuing process of remedying the impacts of the earlier experiment with deregulation in Seattle. As noted in Section 4, the city, county, and airport each took significant re-regulatory actions during the prior ten years, all designed to reverse the effects of open entry. In 1995, the City invited a peer review team of taxi regulators to review its taxi regulatory situation (Avants et al., 1995). The peer review team pointed out the difficulty in enforcing any meaningful service standards with a small enforcement staff and an atomized taxi industry of 217 operators. It was the recommendations of this peer review team that were legislated into law by the City in 1996.

Cincinnati also reacted to problems within the taxi industry and dissatisfaction with the quality of taxi service. Unhappy with earlier confrontations with elements of the taxi industry over requests for new permits and tired of problems within the industry, the City reacted much as did Seattle did in 1979 when it, too, deregulated its taxi industry. Cincinnati might be described as reacting to problems rather than adopting a philosophy of government action.

This was not so in Indianapolis. Indianapolis adopted taxi deregulation as part of a philosophical approach to government action. Inspired by a mayor who advocated less government involvement in private enterprise, the City formed a commission to examine ways to reduce government regulations of all types. It elected to implement taxi deregulation despite its earlier negative experience with a limited form of deregulation in 1973 and 1974.

Indianapolis also differs from the other two cities in that its motivations expanded beyond transportation objectives. Sometime during the consideration of its new taxi regulations the City

Institute for Transportation Research and Education- May 1998 40 Reviewof Taxicab RegulatoryChanges in Cincinnati. Indianapolis,and Seattle

adopted an objective of increasing the number of new job opportunities in the taxi industry, especially for minorities. Thus, in Indianapolis the deregulation initiative also became a social and jobs initiative, another fact that resembles the deregulation action of Seattle in 1979. It should be noted that the experience of Seattle and other deregulated cities has been that attempts to make the taxi industry a vehicle for social change have worked at cross purposes with passenger service quality objectives, e.g., higher fares, poor quality vehicles, short trip refusals, fewer centrally dispatched vehicles, etc. (Price Waterhouse, 1993).

5.4 What Have Been the Impacts of These Changes?

5.4.1 Level of Competition

Even prior to the regulatory changes in these three cities there was extensive competition within the three taxi industries. In Seattle there were more than 220 operators, of which 210 were independent owner-drivers. In Cincinnati there were more than twenty operators before open entry, and in Indianapolis 29 operators. This level of competition is just within the taxi industry in each city and does not include the competition between taxi operators and shuttles, vans, limousines, buses, and cars. Thus, regulatory changes were not needed in order to provide competition for taxi operators in these three cities.

In fact, in Seattle the intended impact of recent regulatory changes was to decrease governmental involvement in regulation of the taxicab industry while providing more control over operators and preserving competition. The 210 owner-drivers were required to join associations, and the result has been a much-reduced number of taxi providers: 10 associations.

In Indianapolis there has an increase in the number of operators. Currently, about 104 independent owner-drivers and two companies compete for passengers. This large number of owner-drivers is also similar to what occurred in Seattle after its 1979 open entry and what has been reported by Price Waterhouse to occur in other open entry cities.

In Cincinnati there has also been an increase in the number of operators: from about twenty to forty-four. Here, too, the pattern exists of more independent owner-drivers (15) after deregulation. However, the growth of independent owner-drivers in Cincinnati has been dampened by the fact that the airport is located in Kentucky and has not been deregulated. Thus, unlike other deregulated cities where independent owner-drivers have become overcrowded at airports, such is not possible at the Cincinnati airport.

5.4.2 Size of Industry

One of the expectations of advocates of open entry is that new taxi operators will enter the industry after open entry. This hope was particularly evident in Indianapolis, which established as one of its objectives that minorities would enter the industry as taxi operators.

In Indianapolis there has been a decrease in the total number of taxi permits after the most recent

Institute for Transportation Research and Education - May 1998 41 open reason entry explanation taxi shuttles

industry In

non-use. No (347

person the

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Cincinnati and 5.4.4

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2 Review of Taxicab RegulatoryChanges in Cincinnati, Indianapolis,and Seattle enforcement has increased, the amount of enforcement personnel has decreased.

The low-level of on-street enforcement raises serious questions about the efficacy of the regulations. Simply put, the enforcement requirements increase with the number of operators and with operators who do not have fixed places of business. In such situations taxi inspectors have great difficulty in simply locating taxi operators, and routine enforcement matters, such as articles left in cabs, become very difficult to adjudicate.

Seattle, recognizing that enforcement is critical but that it was not able to hire enough inspectors to deal with its taxi service problems, opted to increase the level of self-enforcement in its taxi industry. Thus, it adopted the requirement that all taxis belong to associations and that associations exercise responsibility for their member taxis.

5.4.6 Fares

Table 5.1 shows the cut-rent fares in Cincinnati, Indianapolis, and Seattle. It should be noted that distance and wait time rates shown for Cincinnati and Indianapolis are maximum allowable rates, and that actual rates may vary by taxicab company. r9 Table 5.1: Fare Rates Type of Charge E%idianapohs Seattle . “Pick-Up Charge” Drop Charge $2.00 (maximum) allowed but amount not $1.80 specified (typically $1.25-$5.O0).

Distance Charge $0.20 per 1/6mile $0.40 per 1/5 mile $0.20 per 1/9 mile (maximum) (maximum)

Wait Time $0.20 per minute $0.40 per minute $0.50 per minute (maximum) (maximum)

Minimum Fare $3.00

Regional Center $5.00 (downtown) Fare Surcharge not to exceed Extra passenger: $0.65 Extras: $0.50 each Other 25 cents per mi1 for maximum passenger over 2. trips to other cities/areas. Typical Charge for 5 $8.00 (maximum) $10.00 plus Pick-Up $9.00 mile trip (no wait time): Charge.

Institute for Transportation Research and Education - May 1998 43 Review of Taxicab Regulatoiy Changes in Cincinnati, Indianapolis, and Seattle

It should also be noted that Cincinnati is unique among these three cities in having a minimum fare ($3) per trip.

5.4.7 Age of Vehicles

Two of the three cities have a maximum age requirement for taxicabs:

Cincinnati: No maximum age Indianapolis/Marion County: 6 years Seattle (City): 8 years (by August 31, 1999; 9 years through August 31, 1998; King County does not have a maximum age requirement)

It should be noted that in Seattle the local airport authority implemented a seven-year vehicle age limit in 1989. Not only did this requirement predate the adoption of a maximum vehicle age by the City of Seattle, but also it is more stringent than the City’s regulation.

5.4.8 Customer SatLfaction

When gathering information for this report there was a great deal of discussion regarding customer satisfaction—what is the quality of service as perceived by those using, regulating, and providing taxicab transportation. In most instances throughout the country customer satisfaction is largely a subjective matter, supported only by the number of complaints received by regulators. The number of complaints is tracked for a period of several years, and trends of increasing or decreasing numbers of complaints are noted.

Instead of this passive approach King County instituted a system of tracking response times for taxicabs at selected points within the County. A schedule of optimum average response times was established, and actual response times are calculated annually from reviews of dispatch and trip sheet records maintained by taxicab companies. Actual response times are compared to optimum average times to determine the performance of the industry in meeting customer requests for service. Information on response times for the past ten years demonstrates consistent performance within the established standards.

In addition to tracking pickup times the City and County have each established a definitive process for handling both telephone and written complaints. Complaints from customers using City-licensed taxicabs and received on the Taxi Hotline (296-TAXI) are referred to the appropriate taxicab association for resolution. Audits include a review of association complaint logs to verify satisfactory resolution of complaints.

In addition to gathering information on service response time questionnaires distributed to King County taxicab patrons gather information on driver conduct/appearance and taxicab condition. Summary information from those questionnaires is presented in Table 5.2.

Institute for Transporuition Research and Education - May 1998 44

practical

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language, match

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set

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qualifications;

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Indianapolis

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and

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29%

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of

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55%

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10

or

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the

speak,

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complaints.

both.

the

is

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Surveys

and

1998

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written The

completion

no

ordinance

show

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assistance taxicab

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officer

that

and

County

a

penalties

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specific

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and

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city-wide

and

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of

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32%

for 15%

10%

the

10

write

customer

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the

the

knowing

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other

City

of

course

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surrounding

Indianapolis

the :;.

notifies required

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hearing

95%

55%

passenger

34%

74%.

and

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correctly

or

least

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relevant

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service

drivers

in

of

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the

six the

the

the

on

to a Revkw of Taxicab RegulatoryChanges in Cincinnati, indianapolis, and Seattle

4. The applicant’s ability to communicate in English with customers; and 5. The applicant’s skills in operating a motor vehicle, which may include a driving test.

A driving test has been developed and implemented to ensure that applicants can demonstrate practical use of their knowledge. According to the Taxicab Inspector, use of this test has reduced the number of complaints about drivers’ lack of geographic knowledge andlor use of a longer route than necessary to reach a destination.

King County has tested for-hire drivers as a prerequisite for licensure since 1985. The examination is comprised of two parts—ordinance knowledge and geography knowledge. The examination tests an applicant’s knowledge of regulations governing fare determination, driver- passenger relations, conduct, ability to understand oral and written directions in the English language, vehicle safety, and the geography of King County and the surrounding area. Of those who have taken the examination from 1985 through 1996, 4,901 passed, and 1,479 failed. Applicants for a County-only license may take the test as often as the test is given during their 60-day pending period. Applicants for a City of Seattle license may take the test two times. If they fail both attempts, they must wait 60 days before they can reapply and take the test again. Applicants do not receive a temporary license until they have passed the written examination.

5.4.10 Fees

Each of the three cities charges fees for license application and renewal for both taxicab and driver licenses. Each city also charges one or more other fees, linked to the regulatory structure in place (Table 5.3).

Institute for TransportationResearch and Education. May 1998 46 ______

Review of Taxicab Regulatory Changes in Cincinnaci, Indianapolis.and Seattle

Table 5.3: Summary of Fees

Fee Cincinnati Indianapolis Seattle Taxicab Association! $16 annual for $750 annual for Taxicab Dispatching Office dispatching office None Association Late Fee None None $75 Taxicab Change of Not Applicable Not Applicable $50 Assoc. Affiliation $161 annual, Taxicab License $80.50 on or after July $100 annual $240 annual City 1, $10 initial application $140 annual County fee. Late fee (renewal) None None $24 City/$14 Co. Change of Epiipment None None $50 City/$25 Co. City: $240 Sept-Feb Change of Owner $10 Transfer None $120 Mar-Aug $0 July 16-Aug 31

City inspection fees $30/hour, 1 hour Vehicle Inspection included in License Fee Not Applicable minimum, for re-test of taximeter Vehicle Re-Inspection None None $20 Class A violations, $50 Class B violations Inspection Scheduling None None $20 Meter Registration None None $5 Suspension None None $50 Reinstatement Driver License $14 initial annual, $5 $18 bi-annual $55 annual annual_renewal AddlChange Affiliation Not Applicable Not Applicable $20 (maximum of 3 associations) Driver License Late Fee None None $10 ID Photo None None $2 Replacement License $1 l replacement of ID None $5 Card,_$2_subsequently. Driver Trainingl None None $45 training for new Examination applicants: $30 Oral English_Proficiency

A review of comparative costs shows that Seattle/King County is the most expensive jurisdiction of these three cities in which to license a taxicab. However, there appears to be a positive correlation between the amount of regulatory activity and the fees paid. Tnough the costs of regulatory fees are higher in Seattle/King County than in Cincinnati or Indianapolis, satisfaction with the regulatory structure and with taxicab service is also greater in Seattle/King County than in the other cities.

Institute for Transportation Research and Education - May 1998 47 Review of Taxicab Regulatory Changes in Cincinnati,Indianapolis,and Seattle

6.0 Conclusions

This study focused on three aspects of the taxicab regulatory changes in Indianapolis, Cincinnati, and Seattle:

a. What regulatory changes were implemented; b. Why they were implemented; and C. What the impacts have thus far been of these regulatory changes.

Based on the findings and discussion in previous sections it is now possible to draw conclusions about the regulatory changes in these three cities.

1. The regulatory changes in Cincinnati and Indianapolis are similar to those of Seattle in 1979 but are opposite those of Seattle in 1996.

Both Cincinnati and Indianapolis enacted local ordinances to effect open entry into their taxi industries. These actions are directly opposite of the 1996 actions of Seattle in requiring all taxicabs to affiliate with associations and for associations to be responsible for the actions of their taxicabs. However, the actions of Cincinnati and Indianapolis are very similar to those of Seattle in 1979 when it, too, deregulated by opening entry and relaxing fare regulations. This similarity suggests that the re-regulation experience of Seattle may be indicative of what may occur in Cincinnati and Indianapolis in the future.

2. There was a competitive taxi market in each city prior to deregulation.

A common perception of taxicab service is that one or a few taxi companies control the market and open entry is necessary to bring competition to the industry. However, in all three of these cities a high level of competition existed prior to enacting of open entry.

3. These three cities appear to follow a common pattern described by the literature.

Price Waterhouse (1993), Teal (1987), Geib (1983a,b), Dempsey (1996), and Frankena and Pautler (1984) all point out a common pattern that follows open entry in local taxi markets. Usually the fares increase and independent owner-drivers who service taxi queues at airports, hotels, and train stations obtain additional permits. A bifurcation of the industry results with companies focusing on neighborhood trips and independents serving the taxi stands. The problems resulting from too many cabs at these stands then cause the airports and perhaps hotels to institute their own controls over the waiting cabs. Subsequently, the municipal governments respond by enacting entry controls. The result is that regulation is re-imposed, which has occurred in all but four of the twenty-one open entry cities examined by Price Waterhouse.

Impacts from the regulatory changes in these three cities generally follow this pattern. An

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to Review of Taxicab Regulatory Changes in Cincinnati, Indianapolis. and Seattle there is a pent-up demand for taxi permits. Taxi operators face competition from a variety of other transportation providers as well as private autos. The removal of the cap on the number of limousine licenses (75) in Indianapolis as part of the revision of the vehicles-for-hire ordinance resulted in an increase in the number of limousine licenses. Fourteen limousine companies are currently in operation with 89 licensed limousines. The 1994 ordinance revisions also allowed jitneys to operate in Indianapolis-Marion County. No new jitneys have been licensed in the city.

5. The impacts of open entry are dampened in Cincinnati because airport is not deregulated.

One of the common occurrences after open entry has been the growth of the numbers of independent owner-drivers serving taxi stands, especially airports. The reason for this influx is that owner-drivers are able to wait at airports and eventually get trips without having to invest in radio dispatching or advertising. In Cincinnati, however, the airport is located in Kentucky and hence was not affected by Cincinnati’s open entry ordinance. Thus, the city has seen only a modest number of independent owner-drivers (15). Since most of the problems with open entry have first been manifested at airports and other major traffic generators, one can expect that Cincinnati’s problems with open entry will be dampened as long as the airport is not opened to all Cincinnati cabs.

6. Seattle demonstrates the long time required to remedy the effects of open entry.

Nearly two decades have passed since the beginning of Seattle’s experiment with open entry. Although the airport, city, and county all took actions during the 1980s to re-regulate, as recently as 1996 the city was still coping with effects of open entry in terms of service complaints and too many operators to enforce effectively. Prior to the most recent regulatory actions of 1996, the city was still trying to regulate 217 operators, of which 200 were one-cab companies and most without places of business. Thus, the effects of open entry--especially the growth of independent owner-operators--lingered far beyond the open entry time period, making the re-imposition of quality controls very difficult.

Institute for TransportationResearch and Education - May 1998

51 Review of Taxicab Regulatory Changes ri Cincinnati, Indianapolis, and Seattle

BIBLIOGRAPHY

Avants, S., G. Gilbert, and B. Lupro (1995) “Peer Review of Seattle Taxicab Regulation,” Report prepare for City of Seattle, Department of Finance.

Buckeye Institute for Public Policy Solutions (1997) “Taxi Regulation in Ohio’s Largest Cities.”

Dempsey, Paul S. (1996) “Taxi Industry Regulation, Deregulation and Reregulation: The Paradox of Market Failure,” Transportation Law Journal, 24:1, pp. 73-120.

Frankena, M., and P. Pautler (1984) “An Economic Analysis of Taxicab Regulation,” Bureau of Economics, Federal Trade Commission.

Gelb, P. M. (1983a) “Effects of Taxi Regulatory Revision in Seattle, Washington,” U.S. Department of Transportation, Report No. UMTA-WA-06-00 19-83-1.

Geib, P. M. (1983b) “Taxi Regulatory Revision in Indianapolis,” U.S. Department of Transportation, Report No. DOT-TSC- 1409-20.

Goldsmith, S. (1997) “Regulation and the Urban Marketplace,” Regulation, January.

Gross, Marilyn, and R. Feldman (1994) “National Transportation Statistics: 1995,” Bureau of Transportation Statistics, U.S. Department of Transportation, Report No. DOT-VNTSC BTS-94-3.

Lewis, P. (1995) “Cabbies Will Soon Have To Shape Up Or Hit the Road,” Seattle Times, July 19.

Price Waterhouse (1993) “Analysis of Taxicab Deregulation and Re-regulation,” Prepared for International Taxicab Foundation.

Shaw, L.C., Gorman Gilbert, C. Bishop, and E. Pruitt (1983) “Taxicab Regulation in U.S. Cities, Volume 1: Final Report,” Report for Urban Mass Transportation Administration, U. S. Department of Transportation, Report No. DOT-I-84-35.

Stanley, M. T., and R. J. Burby (1988) “A Statistical Profile of the Private Taxicab and Paratransit Industry,” Report prepared for Urban Mass Transit Administration, U.S. Department of Transportation.

Teal, R. F. (1987) “An Overview of the American Experience with Taxi Deregulation,” Halda, Inc., Irvine, CA.

Zerbe, R. (1983) “Seattle Taxis: Deregulation Hits a Pothole,” Regulation, November/December, pp. 43-48.

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