15 Pages Posted: 8 Jun 2015 Last revised: 3 Sep 2015

Date Written: June 7, 2015

Abstract

Uber’s arrival in Europe has generated massive demonstrations by taxi drivers and a number of court judgments banning or restricting Uber’s services on the ground that the company engaged in “unfair competition”. Uber and other online-enabled car transportation services to connect passengers with drivers offer an attractive alternative to regular taxi services. The difficulty is that these services are protected by regulatory measures that create significant barriers to entry. Uber’s business model presents many efficiencies and there is little doubt that it will prevail over time. Regulatory authorities thus face two options. One option is to resist the market entry of Uber and other similar companies. This approach would deprive users of attractive services and trigger many years of litigation. The other option is to embrace technological change and allow Uber to compete on a level playing field with taxi companies. The regulatory changes that will be needed raise complex questions, but these questions are unavoidable and it is important to tackle them early. Taxi companies can also embrace technologies and rely on the competing online-enabled car transportation services platforms that are already available to them.