East Hampton, NY Taxi Regulations Drive Uber Out of Town

Published July 17, 2015

Celebrity residents of East Hampton, New York, a resort town located in the Hamptons region on Long Island, took to social media to announce their displeasure over new taxicab regulations that has forced ridesharing company Uber to cease service in the area.

“I am trying to be a responsible citizen,” East Hampton resident and Bravo talk-show host Andy Cohen posted on Twitter. “I don’t drink & drive. Plz don’t ban my designated driver in EHampton.”

The new regulations, enacted this summer, require all transportation companies or transportation company drivers to maintain a physical office and address within the city’s municipal boundaries.

‘Insulated from Competition’

Jared Meyer, a fellow at the Manhattan Institute for Policy Research, says consumers are the real losers when the taxi industry doesn’t have to compete for consumers.

“Ridesharing companies such as Uber and Lyft continue to inject some much-needed competition into the taxi industry,” Meyer said. “For too long, taxi companies in many cities have been insulated from competition and have functioned as cartels.”

Meyer says government regulation of the taxi industry has led to poorer outcomes for consumers, not better services.

“Their level of customer service has noticeably suffered, which is one reason for the widespread embrace of ridesharing by the public,” Meyer said. “Before state and local lawmakers consider passing laws that would curtail the growth of ridesharing, they need to ask themselves whether it is the public or the established taxi industry that would be protected.”

Fighting the Future

Matthew Mitchell, a senior research fellow with the Mercatus Center, says companies such as Uber and Airbnb are part of the peer-to-peer economy, a revolutionary economic model operating without reliance on government bureaucracies.

“Think of where you live,” Mitchell said. “You’re probably surrounded by thousands of cars that are just lying there idle. So, a huge value added to the sharing economy is that it takes this capital and puts it to work. This is obviously not just cars, but it’s kitchens, tools, airplanes, bedrooms—all kinds of things are now being shared [and rented out] with one another.” 

Captured Industries and Regulators

“A benefit of the sharing economy is that it’s been sort of an end-run around captured industries and captured regulators,” Mitchell said. “Because there are these industries where the incumbent firms have managed to wield so much political power over the regulators, consumers have been underserved for a long time.”

‘Permissionless Innovation’

The rise of the peer-to-peer economy is the next step in “permissionless innovation,” says Mitchell.

“Society progresses when entrepreneurs are allowed to innovate without having to ask [governments] for permission, and this is a perfect example of an innovative technology that can serve consumers and producers,” Mitchell said. “Those places that allow permissionless innovation are going to do well. Consumers and producers are going to see value in that.

“Those that don’t, are not going to do so well,” Mitchell said.

Amelia Hamilton ([email protected]) writes from Traverse City, Michigan.

Internet Info

Adam D. Thierer, Mercatus Center, “Permissionless Innovation: The Continuing Case for Comprehensive Technological Freedom”: https://www.heartland.org/policy-documents/permissionless-innovation-continuing-case-comprehensive-technological-freedom/