The Clash of the Taxis

Uber, HomeAway, and other sharing economy startups have had many run-ins with established companies that don’t like the idea of having to compete economically. Thanks to a phenomenon economists call “rent-seeking,” businesses often try to exploit government power to prevent competition and enrich themselves.

The idea is simple: if government has the power to give people money—or to choose who gets to run a business—people and businesses will invest their time and money in trying to get the government to aid them. That often happens when established companies use the government to outlaw competition so that they can monopolize an industry.

Taxi companies across the country have tried to use century-old licensing laws to shut down Uber and other ridesharing companies. And in some places, the clash has been even worse: in France in 2016, taxi drivers rioted and even burned Uber cars in the streets, demanding that the government shut down competition.  But free competition is good for passengers, who get more affordable transportation; and it’s even good for drivers, who get more job opportunities. So who shot first? The monopolists, that’s who.

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