Abstract:
On August 5, 2016, Governor Charlie Baker signed into law Massachusetts’ first statewide regulations on ride-sharing services like Uber and Lyft. The law was a monumental victory for the ride-sharing companies given that a few years earlier state officials tried to ban the startups from doing business in Massachusetts. The outcome was a major defeat for the taxi industry, whose drivers and license holders argued that their livelihoods were severely threatened by this new competition. They also believed that the competition was unfair and not in the public’s best interest because taxi drivers and vehicles still had to meet stricter safety- and security-standards than ride-sharing services.
Learning Objective:
This case is intended for two purposes. First, in a course on economics to illustrate the concepts of economic efficiency and Pareto optimality and the sources of market failure monopoly, externalities and information asymmetry. Second, in a course on policy analysis to illustrate the difficulties of defining the problem and developing criteria to measure progress.
