Uber and Taxi Racism

Moneybox
A blog about business and economics.
Nov. 28 2012 9:54 AM

Uber and Taxi Racism

Latoya Peterson has a great piece on the ways in which Uber has helped African-American passengers deal with the problems of hailing a cab while black.

Beyond the specific issues of race, I think the kind of price control regimes that we have in the U.S. taxi market generally feature a certain kind of perversity. New York City, for example, is really large. It also has a limited quantity of taxi medallions. Since the medallions are in short supply, they're very expensive. The drivers, in turn, are renting the medallions from the medallion owners. This creates a huge potential problem for the drivers. They're legally obliged to take you wherever you want to go in the city, including random parts of the outer boroughs where very few people are looking to hail a cab. If they drop you there, they need to waste time returning to some more likely place before they can get a new fare. And the medallion owner isn't going to give them a break on the rent just because they had to take you to Little Neck or wherever. They're just screwed.

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So now the drivers have a huge incentive to find ways of avoiding picking up passengers who are going someplace inconvenient for them which ends up screwing people who need to go to those places.

The normal way of working this sort of thing out is price flexibility. If you want a service-provider to provide you with an inconvenient-to-provide service, you just have to pony up the money. But you can't do that in taxi markets.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.

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