Policy Documents

Nashville’s Anti-Competitive ‘Black-Car’ Regulations

Mark W. Frankena –
June 11, 2013

In this article in Regulation Magazine (Vol 36, No. 2) the author writes that metropolitan Nashville (pop. 635,000; 526 sq. mi.) has long had vehicles for hire. Besides taxis, which alone are permitted to use taxi stands and pick up street hails, the city has livery service “black cars,” which are restricted to carrying passengers that have requested service by phone or online, and limousines.

For years, black-car service was free of municipal regulation. Nashville residents and visitors requested black-car service when they preferred its combination of service and fares to the available alternatives. Then, in 2010, Nashville’s elected Metro County Council voted 38–0 to impose regulations on black cars. Some of the regulations make it impossible for them to compete for roughly half the trips they were providing and would have continued to provide absent the regulations.

The anticompetitive regulations harm Nashville’s residents and visitors alike, and enable taxi and limousine companies to earn higher profits. Black-car companies filed a lawsuit in federal court in an attempt to eliminate the worst of the regulations, based on constitutional protections for economic liberty. Unfortunately, in January 2013 a jury voted 8–0 to uphold the regulations. This article tells the story behind those events, and why Nashville is worse off because of them.

 


 

Mark W. Frankena is a senior adviser for the economic consulting firm Cornerstone Research. He is a former deputy director for antitrust in the U.S. Federal Trade Commission’s Bureau of Economics.