The Novelty of TNC Regulation
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Description
In The Upstarts, business journalist Brad Stone chronicles the development of Uber, from Garrett Camp’s 2008 vision of an on-demand car service, to Uber’s impact in the United States as of the end of 2016. Along the way, Stone recounts some of the formative battles Uber and Lyft fought with city and state legislators and regulators. Some of them saw the benefits of Uber and Lyft’s innovations, but also insisted on protecting public safety. Others were overly wedded to the status quo, perhaps because of longstanding ties to the traditional taxi industry. Although it is not Stone’s main focus, the rise of Uber and Lyft is a story of legislative and regulatory innovation, as well as entrepreneurial chutzpah. In the past five years, but especially since 2015, pushed by Uber and Lyft, a new framework has been developed in most parts of the United States to legalize and regulate these upstarts. There are important differences between this new framework and the approach historically used to regulate the taxi industry. While local governments historically were the main regulators of taxis, state governments have elaborated the regulatory framework governing transportation network companies (TNCs) in many parts of the United States. As of the end of June 2017, 48 states have passed legislation facilitating the operations of TNCs, although local governments regulate the TNCs in some of their biggest urban markets, such as New York City, Washington, D.C., and Chicago. Perhaps more important than the change in who is regulating is that jurisdictions are applying a much “lighter” regulatory framework to TNCs than the framework that governs the traditional taxi industry—even though both taxis and TNC vehicles compete in the same market for “point-to-point transportation.” This chapter assesses the novelty of the regulatory regime that has been crafted for TNCs in the United States. I make three main points. First, I offer some historical context for analyzing the TNC regulatory regime in the United States. Decades before the creation of the TNCs, economists had critiqued traditional taxi regulation as antiquated and overly burdensome for the taxi industry. The old regulatory framework was ripe for change long before the TNCs arrived on the scene—and indeed their emergence was partly due to the sclerotic effect of taxi regulations on the taxi industry. Second, I address the content of the regulatory regimes adopted by state and local governments for TNCs. Governments generally have adopted regulatory regimes that are broadly similar in their outlines in that they focus on public safety regulation, and omit the regulation of entry and fare levels that was central to the antiquated taxi regulatory regime. This focus on safety regulation is generally consistent with the longstanding recommendations of economists for the regulation of dispatched taxis, of which TNCs are the modern instantiation. My third point concerns the limits of the regulatory innovation to date. The framework for regulating TNCs reflects the influence of the TNCs, just as the old taxi regulatory regime bore the imprint of the taxi industry. This raises the prospect that TNC regulation, like taxi regulation before it, could be sub-optimal from a broader societal perspective. It also could become a means to entrench the existing TNCs and enable them to complicate the entry of new businesses to the point-to-point transportation market.
Source Publication
Cambridge Handbook of the Law of the Sharing Economy
Source Editors/Authors
Nestor M. Davidson, Michèle Finck, John J. Infranca
Publication Date
2018
Recommended Citation
Wyman, Katrina M., "The Novelty of TNC Regulation" (2018). Faculty Chapters. 1464.
https://gretchen.law.nyu.edu/fac-chapt/1464
