We already know that Uber is great for consumers by providing competition to traditional taxis, thereby lowering prices and increasing choice and convenience
But many have argued that more red-tape is needed for the ride-sharing service to protect consumers from inappropriate and potentially illegal behaviour.
But new research by economists Sean Mulholland and Angela Dills titled Ride-Sharing, Fatal Crashes and Crime has found just the opposite – Uber’s entry into the market actually lowers the rate of arrests for Driving Under the Influence (DUI) and fatal accidents. And, in the main, also reduces arrests for assault and disorderly conduct.
Specifically, the researchers found that the entry of Uber is associated with a 6 per cent decline in the fatal accident rate. While fatal night-time crashes experience a decline of 18 per cent. Similarly, DUIs are 15 to 62 per cent lower after Uber entry. In many cases they find these declines be larger the longer the service has been in operation. Conversely, they observe an increase in vehicle theft potentially as a result of increased interaction with strangers.
This is exactly the type of findings economists expect when more competition enters the market. Increasing the availability and convenience of taxi services means people can have more confidence that after a night on the drink they won’t spend hours standing at a taxi rank. While lower prices from competition make taxi services more affordable, reducing the incentive to try riskier alternatives.
This demonstrates a broader point: ‘consumer protection’ red-tape isn’t about protecting consumers. And ‘public safety’ red-tape aren’t about keeping the public safe. These are just a smokescreen used to justify regulation that deliberately restricts competition to bolster the profits of politically powerful incumbents. Tragically, this comes at the expense of public safety. Competition, by contrast, is the best consumer protection and public safety policy on the books. Bad apples are rooted out of the market. People can leave services they aren’t happy with (and publically advertise this dissatisfaction through online ratings). And the threat of consumer switching drives discipline in the market.
To improve safety, the lesson is clear: deregulate and allow more competition.