Economics of the Taxi Industry: An Uber Shake-up

The taxicab has been one of the dominant forms of transportation in cities all over the world. Since the late 1980's, almost all U.S. cities have chosen to regulate their taxi industry. However, a new technology called ride-sharing applications, such as Uber and Lyft, has caused a major disruption to the traditional taxi industry. Since Uber's inception in 2009, the ride-sharing company has taken a significant amount of business from the taxi industry and is valued at around $60 billion. This study aims to look at the economic impact of Uber on the taxi industry. The study will examine the negative externalities (efficiency, quality, and safety) that come with this new technology. The economic impact will be analyzed by using Cournot's model and will examine the labor market. The main focus of the study will look at U.S. cities specifically the New York market. Possible economic policies will be proposed to create a more efficient taxi industry. The reason for this study is to get a better idea of how ride-sharing technology is changing the taxi industry and if a more efficient for-hire transportation market can be created.