The taxi industry: Turning toward competition and innovation

Montreal, March 14, 2019 – With Quebec preparing to table a bill to modernize the taxi industry, a publication launched today by the MEI shows that the government should take advantage of this opportunity to reduce the regulatory burden and encourage innovation.

Two broad principles should guide the announced reform. The first is the abolition of any kind of permit connected to quotas, whose main effect has been to create costly distortions for consumers, while preventing the industry from evolving.

“The value of permits represents a barrier to entry and affects the incomes of drivers. It makes no sense from an economic point of view to have to purchase the right to produce or to work in a certain field, any more than it does to limit the number of people who have this right. What would not be acceptable for accountants or mechanics is no more so for people who want to drive other people around,” explains Germain Belzile, Senior Associate Researcher at the MEI and author of the publication.

The second principle is that of simplicity and flexibility, in order to accommodate all of the recent innovations, but also those to come. For instance, there is the case of self-driving cars, which will sooner or later be a part of the equation, or the case of shared trips. “The technologies that led to the creation of Uber and Lyft are here to stay, and innovations are going to keep arriving on the market. These allow for a substantial reduction of costs for consumers and should be encouraged, as should greater competition,” points out Germain Belzile.

The establishment of a new industrial environment should also take into account the fact that many drivers bought these permits in good faith, expecting to be able to sell them again, for example upon retirement. These permits have already been abolished elsewhere, and intelligent compensation mechanisms were put in place.

“Whereas current, moribund regulation aims above all to favour the owners of taxi permits, the new framework for the industry should encourage innovation and aim to maximize the well-being of those who are often overlooked, but who are the intended beneficiaries of this service: consumers,” concludes Mr. Belzile.

The Viewpoint entitled “How to Modernize the Taxi Industry” was prepared by Germain Belzile, Senior Associate Researcher at the MEI. This publication is available on our website.

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The MEI is an independent public policy think tank. Through its publications and media appearances, the MEI stimulates debate on public policies in Quebec and across Canada by proposing reforms based on market principles and entrepreneurship.

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Interview requests: Daniel Dufort, Director of External Affairs, MEI. Tel.: 514-273-0969 ext. 2224 / Cell. 738-886-9919 / Email: ddufort@iedm.org