Sarasota, Florida Lawmakers Deregulate Taxicab Services

Published December 7, 2015

Sarasota, Florida lawmakers voted unanimously to deregulate the city’s taxicab industry, one month after voting to remove government restrictions on peer-to-peer economy transportation services such as Uber and Lyft.

When debating the deregulation proposal, government officials were unable to recall why the taxicab industry had been regulated in the first place.

Cure Worse Than Disease

Michael Farren, a research fellow with the Mercatus Center’s Project for the Study of American Capitalism, says government consumer regulations can do more harm than good.

“It is completely possible for a regulation or law to create worse harm than the problem it is trying to solve,” Farren said. “It’s important to consider the possibility of government failure as well as market failure. The problem with regulations is that they generally do a poor job of getting it right because the necessary information to craft the exactly correct regulation doesn’t exist [or] the regulation is generally not dynamic and able to respond to new information and circumstances.”

Historical Examples

Farren says history has shown deregulation causes improvements for consumers.

“Airline, railroad, and trucking deregulation in the late 1970s and early 1980s provide some excellent examples of how when the government stopped heavy-handed regulation of those industries, there were enormous subsequent gains in the amount of value they created for customers,” Farren said.

Businesses Compete, Consumers Win

Sal Nuzzo, vice president of policy at the James Madison Institute, says freer markets can make government regulatory boards obsolete.

“Free markets provide for the greatest protection for consumers because competition breeds quality,” Nuzzo said. “Market participants competing for your patronage have two ways to succeed: lower costs and higher quality.”

Nuzzo says consumers are the winners when businesses have to compete on a level playing field.

“Regulations are oftentimes pursued by existing market players in an attempt to stifle competition and keep new providers from entering the market,” Nuzzo said. “Free markets encourage competition through the fundamental forces of supply and demand.”

Leo Pusateri ([email protected]) writes from Saint Cloud, Minnesota.