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Theory meets practice in the taxi industry: Coase and Uber

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  • Jenk, Justin

Abstract

This paper demonstrates how the transformation of the taxi industry is an example of Coase’s Theorem in practice. The Coase Theorem, as postulated by Nobel Laureate Ronald Coase (1991), is one of the simplest yet profound ideas in economics. The recent advent of new mobile app entrants in the regulated taxi industry, (such as Uber and Lyft) based on: technology, disruptive innovation; mobile app based businesses; using digital practices with smartphones as the core platform, have allowed the recent and ongoing transformation of the city defined, regulated and oligopolistic taxi markets; with value–added effects. The mobile app taxi companies and their business actions are reducing transaction costs, increasing social utility and disaggregating the structure of firms – in keeping with Coase’s Theorem.

Suggested Citation

  • Jenk, Justin, 2015. "Theory meets practice in the taxi industry: Coase and Uber," MPRA Paper 63206, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:63206
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    File URL: https://mpra.ub.uni-muenchen.de/63206/1/MPRA_paper_63206.pdf
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    Citations

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    Cited by:

    1. Brian Fabo & Jovana Karanovic & Katerina Dukova, 2017. "In search of an adequate European policy response to the platform economy," Transfer: European Review of Labour and Research, , vol. 23(2), pages 163-175, May.
    2. Cristiano Codagnone & Federico Biagi & Fabienne Abadie, 2016. "The Passions and the Interests: Unpacking the ‘Sharing Economy’," JRC Research Reports JRC101279, Joint Research Centre.

    More about this item

    Keywords

    Economics; Coase Theorem; Uber; Transaction Costs; Social Utility; Nature of the firm; Disruptive Innovation; Mobile app; Taxi industry; Raktas; Justin Jenk;
    All these keywords.

    JEL classification:

    • A1 - General Economics and Teaching - - General Economics
    • A2 - General Economics and Teaching - - Economic Education and Teaching of Economics
    • D0 - Microeconomics - - General
    • M0 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - General
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • R4 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics

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