But the real secret sauce is Cabcharge's ability to get state taxi regulators to do its bidding at the expense of just about everyone else. In normal markets, a company that fails its customers faces growing competition, forcing it to either improve or die. Not here. Peter Ableson of the University of Sydney claimed in a 2009 paper that between 1990 and 2008, the number of Sydney taxi licences grew by just 20-25 per cent whilst demand for taxis almost doubled. The result is the world's fourth most expensive cab fares. The regulators, in restricting cab licences, have been feathering Cabcharge's nest by keeping supply down and prices up. Way back in 1999 The Productivity Commission said it was "unable to identify benefits to the community that justify restrictions on taxi numbers".

The recent NSW IPART review of Sydney's taxis and Victoria's 2012 industry review expressed similar concerns. Regulators carried on their merry way regardless. But now smartphones, apps and the shared economy threaten to do what the regulators should have done years ago – get more cabs on the road. Apps and services from the likes of Uber, goCatch and Ingogo, all of which offer ways for drivers and passengers to interact, threaten Cabcharge's lunch. Drivers can choose their work hours. There's no cash involved so the risk of theft is minimised. Entry costs are low and hourly rates higher and drivers and passengers can view their reputation and rankings. UberX-like systems could even take traffic off the roads.

This could do to Cabcharge what REA and Seek have done to Fairfax in classified advertising, but a whole lot more quickly. The only thing standing between it and the graveyard is – you guessed it - the regulators. And they're doing their level best to save the dinosaur from extinction. Despite NSW Minister for Transport Gladys Berejiklian saying 'you don't want to limit people's choice', that's exactly what her department is doing. NSW and Victorian authorities are investigating UberX drivers without a taxi or hire car licence, with Transport for NSW threatening fines of up to $110,000 for breaches. In Victoria, drivers are being hit with fines of $1,700. It's almost as if the authorities believe the licensing system actually makes cabs safer and more reliable. Don't they ever catch them? Because the laws don't yet account for these new services, the regulators have the excuse they need to continue playing their historic role of protecting the industry at consumers' expense.

That's been a good bet for the past 15 years but not for much longer. Passengers already know what the alternatives look like and they like them, as do many drivers. The industry is making all the arguments you might expect of a self-regarding, monopoly incumbent. NSW Taxi Council chief Roy Wakelin-King, recently said, 'this has to be dealt with before it gets out of hand'. Don't worry, Roy, the regulators get your drift. The taxi industry is a textbook case of regulatory capture. How else to explain a $110,000 fine for offering someone a lift in a roadworthy car for money? Cabcharge has effectively privatised state regulators, allowing it to limit supply and impose a private tax. But the shift is on and Cabcharge is unlikely to catch up. The arrival of the sharing economy and technology that puts drivers and passengers in direct contact takes the company off capitalism's protected species list and onto the endangered register. On a yield of 7.5 per cent and a PER of 8, the company looks cheap but there's now a better way to orgainse this industry and everyone knows what it is. It's time for the regulators to do the right thing for once and let Cabcharge fight fairly or die.

This article contains general investment advice only (under AFSL 282288). John Addis is a Director of Intelligent Investor Share Advisor. You can unlock all of Share Advisor's stock research and buy recommendations by taking out a 15-day free membership.