Taxi cab businesses have always been operating in a highly competitive and cutthroat market space.  So much so that in some major cities (particularly in the US) taxi medallions are auctioned to regulate the industry and restrict the supply of cabs on the street.  It stands to reason: all you need to operate a cab in the absence of regulation is a driver’s license, a working automobile a GPS, and a good knowledge of the local roads.

Recently a friend sent me an article from the Guardian about Uber- a company which seems to largely be upending the taxi cab business wherever it goes.  From taxi drivers protesting in some European cities, to a plummet in the cost of taxi medallions in New York City, Uber demonstrates how disruptive rapid and volatile market shifts can be from a societal perspective.

So is Uber really that revolutionary?  Well the article referred to me would argue no. The premise of the article is this:  Uber has been burning through their cash reserves from equity (cash from investors) in order to kill competition and capture market share.  This is entirely plausible and there is so much to touch on in the article mentioned (from the monetary side, to business strategy, to corporate taxes and more) that I will have to take each particular point in this article and explain it separately over multiple posts.

Kutsuplus- Finland’s failed private sector response to Uber.

Kutsuplus was a Finnish start-up company run from a local university which was branded as an attempt to be the “Uber” of public transport in Finland.  The aim was to position themselves somewhere in between the public transport fares which was cheaper and the taxi companies fares which were more expensive- a luxury option on public transport if you will.  They did this by maintaining a more efficient system for scheduling fares- using algorithms and an automated scheduling scheme, they reduced overhead costs making this a realistic possibility.

The article referenced bounces around a little like a pinball and touches on so many different fields of economics and business that this might be enough material to discuss for a week. I’ve already mentioned corporate taxes in my post here as the article specifically calls for them in the conclusion:

Taxation seems the only way forward – alas, many governments do not have the courage to ask what is due to them; the compromise between Google and HM Treasury is a case in point.

For now, the article is a good read, so while I prepare coming posts on each point in the topic, it’s well worth taking a look at.

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One thought on “Transport Wars: The Equity Strikes Back

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