Antitrust & Competition Policy Blog

Editor: D. Daniel Sokol
University of Florida
Levin College of Law

Thursday, June 17, 2021

Disruptive Competition and the Cost of Leveling the Playing Field: Evidence from the Taxi Industry

Disruptive Competition and the Cost of Leveling the Playing Field: Evidence from the Taxi Industry

Mario Leccese

University of Maryland, College Park

Abstract

I study the effects of a tax on ride-sharing trips in Chicago, which was nominally motivated by a desire to reduce congestion, but which also affected competition between ride-sharing platforms and traditional taxis. I find that platforms passed through more than 100% of the tax to consumers taking single rides, but there was incomplete pass-through to shared rides. This pattern can be explained by the two-sidedness of the market. The tax shifted demand back to taxis, but only in the downtown area, where competition is more intense. Finally, I find that the tax did not significantly reduce congestion and a simple calibration suggests that it lowered consumer surplus by over $300,000 per day.

https://lawprofessors.typepad.com/antitrustprof_blog/2021/06/disruptive-competition-and-the-cost-of-leveling-the-playing-field-evidence-from-the-taxi-industry.html

| Permalink

Comments

Post a comment