New York’s Misdirected War on Ride-Sharing Will Only Hurt Consumers

By Andrea O'Sullivan. Excerpt:

"The claim that these policies will meaningfully reduce congestion is similarly dubious. To vet this contention, we can look to a report commissioned by the mayor’s office in 2016. The study shows that city congestion started to creep up in 2010, before the advent of ride-sharing, and continued to climb until 2015. There is no significant uptick in congestion after ride-sharing became more pronounced in the last decade. Rather, increased pedestrian traffic and tourism—arguably good “problems” to have—are the real culprit.

Will limiting ride-sharing significantly improve the congestion picture? It is doubtful. Instead, policies that improve the affordability and accessibility of substitute transportation options, like public transit, may do more good.

There is another reason that the New York City Council might seek to crack down on ride-sharing companies, and it has little to do with congestion. Money raised through the sale of taxi licenses constitutes a significant bulk of the revenues generated by the city’s Taxi and Limousine Commission each year. Once a hot commodity topping $1 million in value, the market price of a medallion has fallen beneath $200,000 since ride-sharing offered an alternative, and the city has halted plans to offer more medallions in response. So there is an element of self-interest on the part of the city as well.

There are better ways to balance the competing interests in New York City. As Mercatus scholar Veronique de Rugy outlined in her recent policy briefing, public entities can reduce congestion by creating a level playing field of user fees. Indeed, Uber itself has come out in support of road pricing as a solution to congestion.

While the cap on ride-sharing is more likely to punish select companies than reduce traffic, user fees and privatization can leverage market forces to lower congestion without discouraging innovation. This was the approach taken in São Paulo, Brazil. The city initially attempted to clamp down on ride-sharing in a harsh way like New York before they realized that a lighter-touch road use fee would alleviate concerns about congestion and revenue while leaving room for innovation. The results are promising, and New York should consider a similar approach.

Protecting all drivers, ensuring fairness, and reducing congestion are worthy goals. But a cap on innovative services will not achieve them. New Yorkers deserve the best transportation options available; they will only have them with full access to ride-sharing."