Rethinking TNC Regulations: Enshrining the Past Forestalls the Future

Transportation network company’s (TNC) like Uber and Lyft are barely five years old, yet they have already caused a transportation revolution by putting “dead capital”—or previously underutilized resources—to productive use. They have achieved this by reducing transaction costs between consumers and service providers, which previously inhibited trade from taking place. This revolution has disrupted not only the established transportation service industry, but also the existing laws and regulations concerning for-hire transportation services. Policymakers now need to critically reexamine statutes and regulations affecting the transportation service industry to determine which legal rules, if any, are still necessary.

This public comment from the Mercatus Center at George Mason concludes that it would seem wise to reexamine the flurry of TNC laws passed over the last two years and determine which regulations, if any, are incapable of being solved by ordinary voluntary interaction by private citizens. If there are problems that are beyond entrepreneurial resolution, it is worth questioning whether they are also beyond effective government solution. Regardless, any regulations that remain should ensure that barriers to entry are kept to an absolute minimum to avoid providing monopoly-type power to established companies. Similarly, statutes should strictly avoid business model mandates, especially those that curtail areas of innovation and competition. The best possible future can only be achieved in an environment where service providers are free to innovate, and in fact must innovate, to attract customers.

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