The City Is Big Enough for Both of Them

A RESEARCH STUDY ON NEW YORK'S RIDE HAILING MARKET SHOWS THAT THERE IS NO COMPETITION BETWEEN UBER AND REGULAR TAXIS, JUST TWO DIFFERENT CATEGORIES OF USERS

by Marco Percoco and Filippo Manco, Dept. of Policy Analysis and Public Management, Bocconi
Translated by Alex Foti


The debate on Uber's legitimacy to operate as a company, and on the regulatory regime under which it should eventually do so, is a hot issue for transportation policy today. Although from a political and legislative point of view, the details of the debate vary from country to country, it is generally possible to summarize the positions in the field around two common denominators. On the one hand, there is the belief Uber represents unfair competition for yellow cabs, so that ride-sharing services should be categorized as private public transportation and subjected to the relevant legislation. On the other hand, it is believed that the service supplied by the California-based multinational is different from that provided by traditional taxis, so that regulatory intervention suspending the service or subjecting it to existing legislation would hinder the spread of technological innovation in the urban mobility market.
 
Keeping these two scenarios in mind, we inquired if Uber was actually hurting taxi drivers and, if so, to what extent: the purpose was not to find a solution to the legal dilemma just outlined, but to understand whether entry into the urban mobility market by the company's app has subtracted a portion of demand from taxi drivers or whether it has met the needs of different users. To this end, we assembled a database for all Uber and taxi rides that took place between April and June 2014 in New York City. The study was conducted for the geographic cross-section covering all the 250 taxi zones in New York's five boroughs, as defined by City Hall. This database allowed us to correlate revenue for each single taxi ride with the number of Uber cars circulating in the area at the time the ride was taken.
 
The results show a null or non-significant effect of Uber's competition on the profitability of taxis, indicating that the San Francisco-based company is more likely to meet demand expressed by users that are only marginally relevant for the taxi market or are altogether different. Our analysis would therefore seem to show a de facto separation of the two markets, a fact which would support the idea of having two different kinds of regulatory regimes (if any at all). Of course, these results are not immediately applicable to other urban contexts, as they are specific to New York's reality, but they offer important lessons also for the Italian context, particularly at a moment when the Antitrust Authority and the Transport Regulation Authority have both asked Parliament to legislate on the matter.