A lot of government is about whacking you in the knee with a baseball bat, handing you a Band-Aid, and telling you to remember it the next Election Day. Minnesota – a reliable source – give an example.
In March, the Minneapolis City Council issued an ordinance establishing minimum pay rates for rideshare drivers. Lyft announced that it would cease its services in the city and Uber that he would withdraw from the entire Twin Cities metro. Local media indicated that alternative services were waiting to fill the gap. But as the days passed, they kept waiting.
THE Minnesota reformer reported:
For what? Due to the “barriers to entry” that your textbook ” could be defined as “barriers that limit the freedom of potential competitors to enter and compete in an industry or market.”
Here, these barriers take the form of fees and regulations:
Only one potential competitor — MyWeels (sans “h”) — was granted a license in Minneapolis on Wednesday after paying the city’s annual fee of $37,145 plus $10,615 for a “wheelchair surcharge.” MyWeels is also the only ridesharing alternative to be licensed in St. Paul after paying its annual fee of $41,115. Three companies – MyWeels, Moov and Twin City Taxi – have applied to operate in Minneapolis-St. Paul International Airport, which charges a $500 license fee.
MyWeels founder Elam Baer… said what sets it apart from others is its access to capital – not proprietary new technology or the allegiance of hundreds of drivers.
…
Finding investors is the main test for Uber and Lyft alternatives. In addition to operating licenses for Minneapolis, St. Paul and the airport, transportation network companies must carry commercial insurance for their drivers with premiums of about $150,000 a year.
Joiryde CEO David Linhardt said he dropped out of the race to enter the Twin Cities because of “excessive licensing fees and lack of clarity on insurance costs and coverage requirements.”
The saga – that derailed the state legislative session — has been resolved, for now, by the state enacting lower minimum pay rates for rideshare drivers than those proposed by the Minneapolis City Council: Uber and Lyft will remain in Minnesota.
What about these alternative services? THE Pioneer press reports:
Wridz, which operates in nine states, has not yet finalized its license application with the city of St. Paul, although (general manager Steve) Wright said Thursday the company hopes to have its paperwork in order. here on June 1st.
“It seems like they have every intention of moving things forward quickly,” Wright said Thursday. “Between the two cities and the airport, that’s $100,000 in licensing fees that we gave up to enter this market. I live in 23 regions, and this is the highest level I have ever seen.
The lack of a license prevents the company from carrying out authorized passenger pickups in Saint-Paul. The app said Thursday “please try again once this region becomes active.”
It was unclear Thursday whether the lack of a license also prevented the company from dropping off passengers in St. Paul…
…
…establishing MOOV has faced challenges, including associated licensing and application fees, approximately $37,000 in Minneapolis and $41,000 in St. Paul.
Unlike St. Paul, Minneapolis has at least begun the process of reviewing (MOOV founder Murid Amini’s) license while it works out a payment plan, he said. He had been in talks since March with the St. Paul Department of Safety and Inspections, he said, and finally reached an agreement on May 7.
“They said, ‘OK, fine, we’ll take half up front,'” said Amini, who is still fundraising to find the money.
“Technically, I can go to the suburbs right now,” he added. “I just don’t want to because people will be looking for rides in Minneapolis and St. Paul, and I don’t mean we don’t serve that area. At the airport we are processing our request. We hope to achieve this in the coming weeks. »
An alleged increase in market “concentration” where, as an article in the Chicago Booth Review To put it another way, “many industries have become more concentrated, so much so that large companies (and not just giants) represent an increasingly large share of the economy.” economical bugaboo. As the example of carpooling in the Twin Cities shows, the role of government in generating this phenomenon should not be overlooked and suggestions that government action can remedy a situation it created should be treated with skepticism.
But these are not the only alternative services. In March, a state senator suggested — or should that be “threatened” — “a state-run/developed ride-sharing app.” Remember who gave you that bandage the next election day.
John Phelan is an economist at Center for the American Experience.
