Policy Studies Regulatory Reform

Replacing ridesharing red tape with a red carpet

The attached policy study was published originally by the Texas Public Policy Foundation and was co-authored by Bryan Mathew, a policy analyst with TPPF’s Center for Local Governance.

Ridesharing solves a coordination problem by matching drivers and passengers at the moment of demand. It does so more efficiently than traditional taxi services by closely aligning the incentives of transportation network companies (TNCs) and passengers (Thierer, et al., 35-36). Texas cities have regulated ridesharing in an attempt to assure the safety of drivers, passengers, and third parties. However, many of these regulations erode away efficiency gains, are duplicative of already existing systems, and protect incumbent firms at the expense of innovative new entrants. Furthermore, the inconsistent, patchwork nature of local regulations hinders the development of a more competitive market. Accordingly, the Texas Legislature should step in to prevent municipal regulations of the transportation service sector that are unrelated to legitimate public safety concerns concerning transportation service drivers. In this way, the Legislature will foster an environment that avoids anti competitive “legislative lock” that favors one specific business model over another.

Image by gualtiero boffi

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