How should ride-sharing platforms be regulated? The main aim of this master thesis is to provide a framework for regulators, that helps to create an appropriate regulation for ride-sharing platforms in countries like Germany where ride-sharing platforms are currently banned. To achieve that, the main differences between the conventional taxi industry and its new sharing economy entrants are outlined, and a questionnaire is used to empirically identify advantages as well as disadvantages of ride-sharing platforms. Based on these results and on the related literature, new regulatory approaches are developed.
With the rise of the internet came the rise of the sharing economy. This sharing economy is characterized by platforms which enable peers to share products and services with other peers. Hereby, these platforms are criticised to disrupt traditional industries. One famous example is the ride-sharing platform Uber which entered the taxi market and competes with conventional taxi organisations.
Uber was founded in 2009 and experienced an enormous growth since then. Uber is available in 65 countries, is used by 75 million riders and 3 million drivers, and completes 15 million rides per day. However, Uber is heavily criticised by taxi drivers because they argue that Uber bypasses local licensing and safety laws and amounts to unfair competition. There are many protests by taxi drivers against Uber all over the world. In addition, Uber is criticized for being not safe. For example, the public awareness campaign `Who´s driving you?` promotes for-hire vehicle safety and provides a list of safety incidents highlighting the risks of Uber and Lyft. Nevertheless, ride-sharing platforms like Uber offer several advantages to the public, for example user-friendly ride-hailing, cheaper transport prices, and new flexible job opportunities.
Table of Contents
1. Introduction
2. Basic Terminology
2.1. Regulation
2.2. Sharing Economy
2.3. Ride-Sharing Platforms
3. Related Literature
3.1. Economics of the Taxi Industry
3.2. Regulation and Deregulation of the Conventional Taxi Industry
3.3. Regulation of the Sharing Economy
4. Foundations of Regulation
4.1. Rationales for Regulation
4.2. Criteria for Optimal Regulation
4.3. Regulation Criticism
4.4. Regulation in Practice
5. Foundations of Ride-Sharing Platforms
5.1. Transaction Costs
5.2. Allocation of Resources
5.3. Information Efficiencies and Asymmetries
5.4. Self-Regulatory Mechanisms of Ride-Sharing Platforms
6. Methodology of the Empirical Study
6.1. Choice of Respondents
6.2. Questions for General Analysis
6.3. Questions for Regression Analysis
7. Results of the Empirical Study
7.1. General Analysis of the US Sample
7.2. Regression Analysis of the US Sample
7.3. International Comparison
8. Discussion and Implications for Regulators
9. Conclusion
Research Objectives and Themes
This master thesis aims to provide a regulatory framework for ride-sharing platforms to address current market challenges and legal bans in countries like Germany, by empirically evaluating the advantages and disadvantages of these platforms compared to the conventional taxi industry.
- Economic analysis of the taxi industry and ride-sharing models
- Empirical evaluation of pricing, safety, and service availability
- Regulatory frameworks and the concept of co-regulation
- Comparative study between US, Indian, and Thai markets
- Impact of technology-driven transaction cost reduction
Excerpt from the Book
5.1. Transaction Costs
Transaction costs are the costs of discovering transaction partners and relevant prices as well as the costs of negotiating and concluding a separate contract for each exchange transaction (Coase, 1937, pp. 390–391). According to Coase (1937), although the market mechanism is the most efficient, for complicated tasks and production processes, people have organized themselves in firms to decrease transaction costs. In the taxi industry, those firms would be taxi- or radio-dispatcher organizations. The reason why taxi organizations and radio-dispatchers were formed is that too much transaction costs would occur for a single driver if he or she wanted to work independently as a taxi driver without belonging to a taxi organization.
Considering rides with private drivers, it can be said that before the introduction of ride-sharing platforms, it was very unthinkable to take a paid ride with a private driver because of transaction costs. Hereby, transaction costs mean finding a private driver, negotiating with the driver, get basic information of the driver for safety reasons, and further effort to commit the transaction.
However, due to the technology, which is used by ride-sharing platforms, transaction costs for taking a ride with a private driver have been reduced dramatically (Edelman & Geradin, 2015, p. 4). That means, it is not necessary to put much effort on finding a driver because the taxi-hailing app directly shows where and which drivers are available. Negotiating with the driver is not necessary because prices are set by the platform. Due to the reputational mechanisms of the platform, the passenger can be sure that other passengers also already have taken safe rides with this driver.
Summary of Chapters
1. Introduction: Outlines the rise of the sharing economy and the research goal of developing a regulatory framework for ride-sharing platforms.
2. Basic Terminology: Defines core concepts like regulation, the sharing economy, and the specific nature of ride-sharing platforms.
3. Related Literature: Examines the economics of the taxi industry, existing regulation and deregulation studies, and current approaches to regulating the sharing economy.
4. Foundations of Regulation: Details rationales for regulation, criteria for optimal policy, criticism of current regulatory practices, and case studies in Germany and the US.
5. Foundations of Ride-Sharing Platforms: Analyzes the economic competitive advantages of ride-sharing platforms, including transaction costs and self-regulatory mechanisms.
6. Methodology of the Empirical Study: Describes the design, respondent selection, and questions used for the empirical research and subsequent regression analysis.
7. Results of the Empirical Study: Presents the findings of the US market data, performs regression analysis, and provides an international comparison.
8. Discussion and Implications for Regulators: Synthesizes findings to propose an efficient regulatory model based on co-regulation to enhance consumer welfare.
9. Conclusion: Summarizes the thesis, confirms that ride-sharing is an beneficial alternative, and suggests future research directions.
Keywords
Regulation, Ride-sharing platforms, Sharing economy, Taxi industry, Transaction costs, Co-regulation, Empirical study, Digital transformation, Market failure, Consumer welfare, Surge pricing, Reputational mechanisms, Service quality, Passenger safety, Economic policy
Frequently Asked Questions
What is the core focus of this thesis?
The thesis investigates how ride-sharing platforms should be regulated, providing a framework for regulators to integrate these services into markets where they are currently restricted or banned.
Which fields are primarily examined?
Key topics include the economics of the taxi industry, digital transformation of transport, the impact of platform technology on market efficiency, and the regulatory challenges posed by sharing economy models.
What is the primary research question?
The study moves to answer: "How should ride-sharing platforms be regulated?" to ensure consumer safety and fair competition without stifling innovation.
What research methodology is applied?
The author uses a questionnaire-based empirical study with 285 respondents, supplemented by OLS regressions to analyze perceptions regarding cost, safety, and service availability.
What does the main body of the work cover?
The main body covers the transition from legacy taxi models to platform-based transport, analyzing transaction costs, self-regulation through feedback loops, and comparative regulatory environments in Germany and the United States.
What are the characterizing keywords?
The work is defined by concepts such as transaction costs, co-regulation, surge pricing, information asymmetries, and platform-driven allocation efficiency.
How do reputational mechanisms solve market problems?
The thesis details how rating systems help solve the 'lemons problem' by providing passengers with trusted information about driver quality, which traditional taxi hailing often lacks.
Why are ride-sharing platforms considered more efficient?
They are shown to reduce transaction costs through automated matching, dynamic pricing, and superior information transparency, leading to higher capacity utilization compared to traditional taxis.
What are the implications for German regulators?
The author suggests moving away from strict bans and instead adopting a co-regulatory approach where government entities and platforms collaborate to set standards and ensure public safety.
- Arbeit zitieren
- Arthur Herzog (Autor:in), 2018, Regulation of Ride Sharing Platforms, München, GRIN Verlag, https://www.grin.com/document/1432037
