Precisely because taxi fares are highly regulated, cab drivers have historically had almost no bargaining power when it comes to their own income. The fares are set, and even if fares rise, the fleet owners will waste no time in taking advantage of that rise in fares to simply raise the cost of leasing a cab. Especially in New York, where there’s a limited number of medallions, anybody who wants to drive a taxi basically has to just accept whatever deal is offered.
But now they have a choice, which is excellent news — for them, and also for the public as a whole, which clearly loves the ability to easily order cabs from indoors, rather than having to take their chances on the street or on the phone with a dispatch service of dubious reliability and punctuality.
On the other hand, it’s not good news for the owners of the fleets. If they have to pay more to retain their drivers, that’s going to eat into their profits. And in turn, that will mean that they’re in turn willing to pay less for medallions.—
“Why cab drivers should love Uber" via Reuters
Thanks to Kate for finding this article. This is the classic case of disrupting the middleman, opening the market between providers and buyers to freely transact, and something sorely needed in many other markets besides taxi services.(via marksbirch)