Uber Tax Industry Analysis

The major challengers that Uber has had to face would be the long-standing taxi industry. “Undisrupted since the early 20th century”, the taxi industry was dominating the car-for-hire sector of the market (Posen, 2015, p.405). When taxi service was shifting from the hors-drawn carriage to automobiles, there was a huge expansion in an industry that was not very well regulated, so as a result there was an “over-populated” supply of taxis which often lead to territorial wars over passengers (Posen, 2015, p.410). Due to the lack of control over the limit of taxies on the streets, city officials have put in place several regulations, one of which was the medallion system. A medallion acts as a permit for a vehicle, and the city limits the number of taxi medallions available, in hopes of controlling the supply of taxis in the market while at the same
Uber is also known to deliberately set their fare to compete with taxi fares, and since UberX does not follow the same regulations as the taxi industry, where they do not have to buy medallions or have the same insurance requirements, they can charge costumers a much lower price then taxi industries, making UberX a “nearly perfect substitute” (Kelly, 2015; Ngo, 2015 p.39). Due to the low pricing of Uber coupled with the fast and easy method that their technology offers, Uber became a very popular rival, leading taxi drivers to confront Uber by claim that their service is “unfair competition, consumer fraud, and deceptive business practices” (Posen, 2015, p.418). The gray area Uber falls under when it comes to defining its establishment has made it legally difficult for cities to regulate them the same way they do taxi industries, creating an unequal marketplace; it is not an introduction of a new company that troubles taxi drives but their lack of regulations, and so they challenge cities to enforce equal rights. “Taxi drivers just want these new companies to follow local regulations” (Posen, 2015,