Regulation of Industry: When does an industry need to be regulated and when should the market be left to determine price and product?
The topic of what role the government should have concerning Canadians using alternative types of transportation services is a controversial issue in today’s society. Historically, the taxi industry has been tightly regulated and has gone without major competition until recently, with the creation of ride sharing services. Since its creation in 2009, Uber is the main source of competition to the taxi industry and is often faced with scrutiny. Uber utilizes smartphone applications to match drivers to customers. However, the difference between Uber and taxis is that Uber does not provide vehicles or operators;
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The four main goals of the normative analysis are economic efficiency, macroeconomic stabilization and growth, fairness, and other social objectives. Each goal will be used to examine the role of the government in regulating new types of transportation services for Canadians (Brander, 2014, pp. …show more content…
With under regulation, there is competitive pressure on taxicab’s fees, from Uber’s lower prices. This pressure from Uber can influence the taxi industry to adapt and embrace new technology to grow the services in order to survive in the industry. If adaption does not occur in the taxi industry, they will be pushed out of the industry and Uber will become the lead participant (Petropoulous, 2016). Moreover, under regulation increases the supply of services, which decreases the price for consumers (What factors change supply? ).
However, if the government did choose to place regulations for ride-sharing services, the level of government that should legislate it is important. In Government Policy Toward Business, transportation is regulated by various authorities and by all levels of government (Brander, 2014, p. 280). Since three levels of government are regulating Canada’s transportation, it only makes sense for the ride-sharing industry to be regulated by the same groups. Although, Uber is in its early days in Canada, examples of the three levels of government regulating the industry has already taken place.
Regarding the municipal government, Edmonton is Canada’s first city to make bylaws for ride sharing. Starting on March 1, 2016, in Edmonton, Alberta Uber drivers must have the following:
• A criminal background check
• A vehicle
Governments can adopt laws and also dis allow commercial activity like banning Uber from cities and
When I researched which sectors of the economy are monopolized, I had a lot of mixed feeling about each industry. For example, I like that our health care industry is monopolized by the government because ordinary Canadians pay less for health care and prescription drugs. However, I dislike the monopoly in the telecommunications sector because of the poor customer 's service and quality of the product i.e. network throttling. Although, I believe this type of monopoly is necessar·y to more our network infrastructure forward.
Monopoly, means that a firm is sole seller of a product without any close substitutes, controls over the prices the firms charge. Government sometime grants a monopoly because doing so is viewed not only to be in the public interest, but also to encourage it with price incentives. However, monopolies fail to meet their resource allocation efficiently, producing less than the socially desirable quantities of output and charging prices above marginal cost. Thus, this inefficiency of monopoly causes the quantity sold to fall short of social needs. In order to handle the problems, policymakers in the government regulate the behavior of monopolies and try to make monopolized industries more competitive
Jonathan Kay’s “Fare Share” has many weaknesses that make his argument not effective when writing his article. Kay’s argument talks about how Uber is stealing taxi drivers of their livelihoods and how Uber is taking over the taxi monopoly. Weaknesses found in this article was when Jonathan Kay makes Uber look bad when talking about their flashy app which seems to kind of promote it even more, and with a little more research he can find other taxi apps. To add on he seems to write it very tongue-in-cheek. Furthermore, Kay also lacks evidence to support what he says because some of his arguments are weak and basic. Another weakness would be that he left the reader wondering what he is trying to prove in his argument about Uber, he seems to be all over the place with his argument. Overall, this was a weakly written article.
Governments regulate businesses when market failure seems to arise and occur and to control natural monopolies, control negative externalities, and to achieve social goals among other reasons. Setting government regulations on natural monopolies is important because if not regulated, then these natural monopolies could restrict output and raise prices for consumers. It is important to regulate natural monopolies because they don’t have any competition to drive down the price of the product they are selling. Therefore, with no competition, they can control the output and the price of the product at whatever they deem necessary. With regulations the government keeps it fair both for the consumer and producer. It’s also important for government
In some industries, it is possible to encourage competition, and therefore there will be less need for government regulation.” When competition is endorsed and encouraged there becomes less need for regulation because then the market does hold other industries accountable and prices are kept low, quality is high and both are fair. This is the whole concept of a free market and should be one of the biggest purposes of the government’s economic agenda. Promoting a free market however can include breaking up monopolies or regulating monopolies. Ultimately, the government should stay out of the workings of the free market as the definition says, “without government regulation or fear of monopolies,” (Free Market). The government should not intervene with the free market but simply promote the idea and encourage the process so that way the market can be completely free and most efficient. However, the free market is also a place that is to be without fear of monopolies. This means monopolies should either not exist or not be a threat and either way that requires government authority to regulate the potentially dangerous monopolies. If no monopolies exist or persist then the government should sit back and only promote competition as its economic
This becomes even more apparent when you realize the provinces are responsible for much of the legislation around
To be an official uber, one must pass a background check, be at least 21 years old, have car insurance, and lastly have a car. There is no interview process, face to face meeting or anything; you simply pass a background check and you’re an uber driver. In Cincinnati, an Uber driver with a criminal history attacked one of their riders. The lady jumped out of the moving car and called the police, "He wasn't listening at all to me, I told him to leave maybe 50 times, and you know he wouldn't leave” she told the police. Since 2010, the year Uber was founded, there have been over one hundred attacks, kidnappings, and assaults. Another incident occurred in late 2015, when 26 year old uber driver, Patrick Karajah, beat his passenger with a hammer and drove away. The victim of the assault recalls, "All of the sudden [Karajah] appeared at the door with the hammer and said, 'I told you to get the f*** out of my car,'". The Uber driver was charged with assault with a deadly weapon and battery with serious bodily injury, and he has pleaded not guilty to both counts, according to the San Francisco District Attorney's Office; Karajah was freed on $125,000 bail. Uber continues to prove why their business cannot be trusted, do you know who is driving
industries strive for. Government regulations are meant to help more than just the one entity; the
Oligopolies have considerable control over the price market, however, when changing prices, output, or advertising each must consider the response of its rival. Just as a monopoly has entry barriers, these same barriers apply to the oligopoly as well. One significant difference in an oligopoly versus a monopoly is that the oligopoly is a common practice in the market system, whereas a monopoly is prevented through federal
There are a lot of positive reports about the benefits working for Uber has compared to working for a taxi company. Cab drivers have to pay exponential rates to lease cabs; Uber drivers have the freedom to drive cars they own. Many former cab drivers have switched to Uber due to the personal financial benefits (“Uber isn’t Just Good For…”). There have been some reports of inappropriate
Uber needs to focus its entry into densely populated areas of Canada lacking a well developed public transit system. These opportunities can easily be taken advantage of if Uber was to further develop its existing strengths.
It is a part of the American culture, angry people on their way to work all in a hurry in rage that someone cut them off. While traffic is a well known irritating aspect of everyday transportation, Uber claims that they have not added more traffic. They claim that their data proves they do not add to the congestion in cities but, “transportation analyst Charles Komanoff has crunched Uber’s own numbers and estimates that the service has actually reduced traffic speeds in the central business district by about 8 percent”(3). Eight percent, that does not seem like a lot but remember this is still a new business and it is only growing larger everyday. Uber is adding to the everyday problem people deal with on their way to work.
A monopoly is “a single firm in control of both industry output and price” (Review of Market Structure, n.d.). It has a high entry and exit barrier and a perceived heterogeneous product. The firm is the sole provider of the product, substitutes for the product are limited, and high barriers are used to dissuade competitors and leads to a single firm being able to ...
...er commutes. In analyzing all the traffic congestion policies, I believe this policy alternative will have the greatest impact in reducing traffic congestion. It properly prices the roads in which supply will equal the demand. In addition, it generates revenue for the local government which can mitigate the costs in maintaining the roads and infrastructure.