Comment by InCom-0 | Hacker News Reader

Comment by InCom-0 | Hacker News Reader

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The supposed 'taxi cartel' were just (some) scummy operators ... not really a cartel. Fast forward to today => you are paying more for what is essentially very similar service (because it literally turned into a monopoly because of network effects) and the money ends up in the pocket of some corporate douche not even the people doing the actual work.

This is the business model: get more money out of customers (because no real alternative) and the drivers (because zero negotiating power). Not to mention that they actually got to that position by literally operating at a loss for over a decade (because venture money). Textbook anti-competitive practices.

However, the idea itself (that is having an app to order taxi) is spectacular. It also something a high-school kid could make in a month in his garage. The actual strength of the business model is the network effects and the anti-competitive practices, not the app or anything having to do with service quality.

Classic indications of a cartel (in the economic sense) are deliberate limitations of supply and fixing of prices through collusion. I don’t know about other cities, but NYC absolutely had a taxi cartel.

This is true ... except that it is simplistically naive way of looking at things, because this is just one form (out of many) of anti-competitive practices. It is essentially high-school level elementary basics of anti-trust. In actual reality there is quite a bit more to it than that.

For instance: Monopolies often don't actually limit supply. You only make it so customers can't choose an alternative and set prices accordingly (that is higher than they would have been if there were real alternatives). Big-tech companies do this all the time. Collusion is also not required, but only one form (today virtually unheard of or very rare) of how it may happen. For instance: big-tech companies often don't actually encroach on core parts of the business of other big-tech companies. Google, Microsoft and Apple or Uber are all totally different business with little competitive overlap. They are not doing this because of outright collusion. It's live and let live. Why compete with them when they are leaving us alone in our corner? Also: trying to compete is expensive (for them), it's risky and may hurt them in other ways. This is one of the dirty little secrets: Established companies don't (really) want to compete with other big companies. They all just want to protect what's their and keep it that way. If you don't believe me have a look at the (publicly available) emails from execs that are public record. Anti-competitive thinking through and through.

So - putting aside the other waffle and snide remarks - you’re agreeing with me that, in NYC at least, taxis were operated as a cartel?

In the classical economic sense, Lyft/Uber should be competing to drive prices down to razor thin margins for the facilitator service. Is that happening? Or are they pocketing fat margins?

And it wasn't much of a cartel in NYC before, anyways. Most subways stops in Brooklyn had a black car nearby if you knew how to look for them.

Last time I checked, neither Uber nor Lyft were profitable (at all!) before the 2023-2024 time period.

True but if they need 25-50 percent to be unprofitable.. why are we so mad at the previous cartel again? I thought this was progress?

Taxis were a cottage industry - pretty much the opposite of a cartel (so were Bed and Breakfasts, another "app-disrupted" business).

Could you tell me why you think that?

In NYC, prior to Uber entering the market, taxi medallions changed hands for up to $1mm. Prices were fixed by the TLC.

If these are no strong indications of a cartel, I don’t know what is.

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