The rise of the so-called “sharing economy” has created new competition across a number of industries, most notably hotels, through Airbnb, and taxis, through ride-sharing services like Uber, Lyft, and Sidecar. This paper explores the competitive effects of ride-sharing on the taxi industry using a detailed dataset from the New York City Taxi and Limousine Commission of over a billion NYC taxi rides, taxi complaints from New York and Chicago, and information from Google Trends on the popularity of the largest ride-sharing service, Uber. I find that controlling for underlying trends and weather conditions that might affect taxi service, Uber’s increasing popularity is associated with a decline in consumer complaints per trip about taxis in New York. In Chicago, Uber’s growth is associated with a decline in particular types of complaints about taxis, including broken credit card machines, air conditioning and heating, rudeness, and talking on cell phones.
While the data do not make it possible to derive the magnitude of the effects or calculate changes in consumer surplus, the results provide evidence that Uber has created an alternative for consumers who would have otherwise complained to the regulator and encouraged taxis to improve their own service in response to the new competition.
Scott Wallsten is President and Senior Fellow at the Technology Policy Institute, a Policy Fellow at the Stanford Institute for Economic Policy Research (SIEPR), and a senior fellow at the Georgetown Center for Business and Public Policy. He is an economist with expertise in industrial organization and public policy, and his research focuses on competition, regulation, telecommunications, the economics of digitization, and technology policy. He was the economics director for the FCC's National Broadband Plan and has been a lecturer in Stanford University's public policy program, director of communications policy studies and senior fellow at the Progress & Freedom Foundation, a senior fellow at the AEI–Brookings Joint Center for Regulatory Studies, a resident scholar at the American Enterprise Institute, an economist at the World Bank, and a staff economist at the U.S. President's Council of Economic Advisers. He holds a PhD in economics from Stanford University.
