Files and links (1)
Free to read and download, Open Access
This thesis quantitatively and qualitatively analyzes the economic regulations that govern taxicab firms in Iowa City, Iowa. Based upon a review of the relevant literature, an economic analysis of regulations and market power, and conducted interviews among taxicab owners and drivers, city staff and planners, and members of the general public, this paper will analyze the costs and implications of economic regulations and risks of regulatory capture, and identify improvements to existing ordinances and city codes. Current economic theory argues that economic regulations create both real and perceived entry barriers, and impose costs to producers and consumers. Additionally, these regulations stifles entrepreneurship and innovation, reduces driver pay, and in some instances leads to discrimination and encumbrance for the most vulnerable residents, recent immigrants and the car-less poor.
On the question of whether economic regulations causes high concentrations of market power in U.S. cities, regression analysis of medium to large U.S. cities does not reveal a correlation between entry regulation and market power. Additionally, calculations of the Herfindahl (HH) Index for taxi firms in Iowa City yields a HH score of 0.103052, which is considered an un-concentrated market. However, while the quantitative data indicates that economic regulations do not cause an identifiable influence on market power, qualitative data gathered from stakeholder interviews reveal a burden in the form of unavoidable sunk costs for drivers, owners, and riders. These interviews reveal the "true" costs of regulations, as well as the perceived costs by policy makers, regulators, and the general public, who frequently underestimate the burden of regulation. This thesis further highlights how regulations arise in the policy-making process; and to what extend they stem from either anti-competitive interests between established firms, a lack of information among policymakers, or simply planners' failure to integrate taxis into a more comprehensive regional transportation system.
Ultimately this thesis argues that some of Iowa City's taxicab regulations, particularly the liability insurance minimums for drivers, the terms of operation for dispatching, and the profiling of immigrant and small firm cabbies by ICPD are burdensome and unnecessary. Loosening of these restrictions would benefit small firm and drivers, the general consumer of taxi services, and compliment larger city planning goals in Iowa City, Iowa. Despite the costs and burdens, this thesis does not justify complete deregulation for Iowa City's transportation policy, particularly when case studies of such efforts have not always yielded positive benefits. Instead, this thesis advocates for "better regulation", to be enforced on a regional level, rather than at a municipal level.