Occasionally a taxi driver will complain to me about the costs of licensing or the expensive safety test he is about to send his car in for. I always suggest that there is no need for taxi licensing at all. The taxi driver does not like this one bit. Of course not: the main purpose of licensing is to restrict supply and keep prices high.
The makers of a smartphone app called Uber are currently having various battles with taxi licensing authorities. They want to make it easier for people to order and pay for taxis and presumably in return take a cut of the fares. Price controls, metering and rules about how drivers are paid are getting in their way.
Meanwhile in Chennai, auto-rickshaws (known elsewhere as tuk tuks) are not metered. There is a campaign to have meters installed in them to fix the prices along with “proper” regulation and licensing. One problem people are complaining about is high prices; another is the behaviour of drivers, such as choosing customers and forcing people to share rides. These problems suggest to me that there is a shortage of auto-rickshaws, but my friend from Chennai disagrees. She explains that there are plenty of drivers, but they agree amongst themselves who will take which passenger so that passengers can not choose between drivers to get a better deal. This sounds like union behaviour, and an obvious question with perhaps an obvious answer is: what stops drivers operating outside of the union?
Here is a typical comment from the Missing Meter Facebook page:
the auto stand in my area itself (near perungudi bus stop – OMR)…… they will ask triple the charge if they see me in urge of going (dressed like professional)…. they will not let the autos to stop which are passing by… so we will end up in negotiating with those guys & pay atleast double the amount of real charge… apprx – 20 rs / km… this happens almost all the time….
Establishing free markets is never easy.