Principles for the regulation of for-­hire road passenger transportation services[Principes pour la réglementation des plates-formes de mise en relation entre clients et transport privé particulier de personnes]

All over the world, the rapid spread of app-based private for-hire transport services competing with the traditional taxis has taken regulators by surprise and faced massive and sometimes violent reaction from the taxi drivers and taxi licence owners. Everywhere, politicians are pressed to legislate. And they face a dilemma: whether to satisfy the social demands of taxis for protection against this new competition or whether to support change so as to cater for the tremendous popularity of these new services. The social and political reasons for responding to the claims of the traditional taxi industry are well grounded but they are mostly short-term. We are here more interested by a longer-term perspective and propose to present some principles for the regulation of for-hire road passenger transportation services based on economic considerations. Some of these principles have already been partly applied by regulators in some countries; in some other countries they have been wilfully ignored. We draw examples from both to identify feasibility and pitfalls of some principles we put forward. For nearly four centuries, taxicab regulation was justified by two market failures that largely disappeared with the advent of smartphones. However, the fact that taxicab regulations were rendered obsolete does not mean that the for-hire road passenger transportation services do not need to be regulated, much to the contrary. There must first be regulations regarding the vehicles, the drivers and the operators. The principles underlying most of these regulations are now well established, drawing on the experience of cities like London. But the smartphone revolution brought a new actor in the field: the app-based platform that dispatches drivers to the potential riders. Although some of these firms present themselves as a mere market place that allows buyers, i.e. passengers, and sellers, i.e. drivers, to meet, the truth is quite different. The "equilibrium" prices are in fact set by the platform with a wide propensity to manipulation, as recent price wars have demonstrated. It is our opinion that this new market is prone to natural monopolies. We have shown some of the potential drawback of these monopolies and proposed some policy tools to prevent their emergence. Some of our recommendation may seem farfetched and much too premature. We believe that it is easier to implement them now that they still have little bearing. It will give time to adjust them to a situation that is rapidly evolving.