Theory meets practice in the taxi industry: Coase and Uber

Jenk, Justin (2015): Theory meets practice in the taxi industry: Coase and Uber.

Abstract

This paper demonstrates how the transformation of the taxi industry is an example of Coase’s Theorem in practice. The Coase Theorem, as postulated by Nobel Laureate Ronald Coase (1991), is one of the simplest yet profound ideas in economics. The recent advent of new mobile app entrants in the regulated taxi industry, (such as Uber and Lyft) based on: technology, disruptive innovation; mobile app based businesses; using digital practices with smartphones as the core platform, have allowed the recent and ongoing transformation of the city defined, regulated and oligopolistic taxi markets; with value–added effects. The mobile app taxi companies and their business actions are reducing transaction costs, increasing social utility and disaggregating the structure of firms – in keeping with Coase’s Theorem.

• Item Type: MPRA Paper
• Language: English
• Keywords: Economics, Coase Theorem, Uber, Transaction Costs, Social Utility, Nature of the firm, Disruptive Innovation, Mobile app, Taxi industry, Raktas, Justin Jenk
• Subjects: A - General Economics and Teaching > A1 - General Economics; A - General Economics and Teaching > A2 - Economic Education and Teaching of Economics; D - Microeconomics > D0 - General; M - Business Administration and Business Economics ; Marketing ; Accounting ; Personnel Economics > M0 - General; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development; O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights; R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R4 - Transportation Economics

References

http://purao.ist.psu.edu/532/Readings/Coase1937.pdf

http://www.econ.ucsb.edu/~tedb/Courses/UCSBpf/readings/coase.pdf

S. Silverstein, http://www.businessinsider.com/uber-vs-taxi-pricing-by-city-2014-10?IR=T

MIT, ”Proceedings of the National Academies of Sciences”

http://newsoffice.mit.edu/2014/rideshare-data-cut-taxi-time-0901com;

www.bandwagon.com

www.raktas.ee

www.justinjenk.com