IP-6-93 (April 1993)
Author: Dwight Filley
- The Colorado Public Utilities Commission has blocked new competitors from entering Denver’s three-firm taxicab market for nearly half a century. Job creation and entrepreneurship, especially for low income people are hurt by this policy.
- The restriction on taxi startups, dating from Depression-era rules meant to protect existing operators, survived a recent legislative challenge but now faces a federal judge.
- Evidence form Denver’s poorer neighborhoods suggest there is unmet demand for more cabs as well as a willingness to provide them.
- Easing entry restrictions in other cities has increased the number of cabs 33-137% with a significant decrease in waiting times for service. But likely fare trends are harder to predict.
- Upon examination there is little merit in the arguments for continues entry restrictions, including congestion and pollution, diseconomies of smaller operators, consumer protection and maintenance of a wage floor.
- Since free entry into the taxicab market would yeild substantial public benefits, PUC regulation of taxi should be limited to requiring safe drivers, safe vehicles, and proper insurance.