Incentive Regulation of Transportation Network Companies

Transportation network companies (TNCs) like Uber and Lyft have revolutionized metropolitan transportation, surpassing traditional taxis in usage and rivaling bus ridership in the U.S. Despite their rapid growth, there has been limited analysis of appropriate policy responses. This project explored policy issues stemming from TNCs’ “economies of density,” where increased vehicle and customer density reduces wait and idle times, giving large TNCs a competitive advantage over smaller ones and taxis. This raises concerns about industry monopolization and regulatory disparities. The project’s objective was to explore whether and how TNCs should be regulated, as evidenced by policy developments like New York City's cap on TNC vehicles and the establishment of a minimum wage for TNC drivers. These measures address traffic congestion and the economic challenges faced by taxi drivers, with other cities considering similar actions. Additionally, the project incorporated insights from a case study on the Los Angeles taxi industry, which highlighted regulatory inertia in response to TNC growth. The researcher later shifted focus to broader questions about TNCs' impact on metropolitan transportation, particularly their economies of density. Key research areas include TNCs' potential role in improving suburban-urban connectivity, integrating TNCs with mass transit to reverse declining ridership, and alleviating downtown parking challenges. These issues underscore the complexities of regulating a dynamic and rapidly evolving industry. This report summarizes the modeling approach developed and includes an unpublished case study, "The Taxi Industry and TNCs in Los Angeles," providing detailed analysis and recommendations for future research. View the NCST Project Webpage