Who’s Anti-competitive?

Here’s a letter to the Baltimore Sun:

To the editor,

The Annapolis mayor’s and taxicab companies’ justifications for regulating Uber conflict with the facts (“Annapolis gives Uber a warning,” July 15, 2014).

The mayor “insists that [Uber be] regulated…like…taxicabs…to keep our citizens and visitors safe.” But Uber already checks its drivers’ backgrounds and requires they be well insured. More  telling, every Uber rider can rate every driver he or she rides with immediately after the ride, via the Uber app. Uber cuts off drivers whose average rating falls below 4.6 out of 5. This is far more effective than the state provides for taxis.

The “more than 30 Maryland cab companies [who] sued Uber” this month alleged “anti-trust violations.” Now wait a minute. Anti-trust law is supposed to prohibit anti-competitive behavior, but Uber is new competition for taxis–how can additional competition be anti-competitive? The allegation reverses the plain facts: what’s anti-competitive is the taxicab companies’ lawsuit to hamper their competition.

The taxicab companies further allege that “Uber’s surge-pricing model is essentially price fixing.” Uber does set prices, true, but it resets them minute by minute and varies them from place to place to match up cars and riders quickly. Taxicabs’ prices, by contrast, are fixed across the city around the clock: “Rates are set by the Annapolis City Council.” Do the taxicab companies object to their government-enforced price fixing, too?

“Robert Eades, Owner of Neat N Klean taxi company in Annapolis” does some wishful thinking at odds with the facts when he says “there’s not enough business to support Uber.” If that were true, Uber would fail in Annapolis. The reality seems to be that because so many riders choose Uber now, there is less and less business left to support taxi companies such as Mr. Eades’s.

One complaint of the taxicab companies is valid and important: Uber’s “refusal to follow cab regulations creates an unfair playing field.” That’s true. But only in a state sick from politicians’ meddling would that unfairness be relieved by leveling down, by burdening Uber with needless regulations so it can’t please its customers as well. The right way to level the playing field is to level it upward, to free the taxicab companies from their needless regulations and price controls.

In a world of the Internet, smart phones, real-time customer ratings, and GPS, open competition would provide all the regulation of ride services we need. And it would prevent the abuse of government regulation that Mayor Pantelides, the Maryland Public Service Commission, and the Maryland taxicab companies are trying to inflict on Uber and the citizens of Annapolis.

Sincerely,

Howard Baetjer Jr.
Lecturer, Department of Economics
Towson University
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