Taxi drivers are hamstrung in their ability to compete with Uber. They don't control the major lever of competition, the ability to lower their fares. They aren't allowed to surge price either, which can boost the supply of cars when and where passengers need them. In many markets, they can't let riders pay by smartphone or order a car that way.
But taxi drivers do control many aspects of the quality of a ride. And in one fascinating consequence of the rise of Uber, it looks — in passenger complaint data — as if taxi drivers under new competition may be trying harder to give you a pleasant ride.
The Technology Policy Institute's Scott Wallsten, in research presented this week at the annual meeting of the American Economic Association, finds evidence in New York that the number of complaints per taxi trip there has declined as Uber has expanded in the city. In Chicago, complaints about air conditioning, "broken" credit card machines and rude drivers have fallen as well with the recent rise of alternatives to taxicabs.
Here Wallsten's weekly data from New York showing the number of complaints per 100,000 rides:
As Uber grew more popular in New York (a trend Wallsten corroborates with Google Trends data), complaints fell, even controlling for factors like the weather that might affect taxi service.
Chicago doesn't publish data on the total number of taxi trips, which makes a similar analysis impossible. But the city does collect much more detailed consumer complaint data. And Wallsten's analysis there suggests that Uber's growth is associated in Chicago with a decline in specific types of complaints, including about heating and air conditioning, drivers talking on cellphones and broken credit card machines (which are often "broken" when drivers would rather you pay in cash).
In this chart, complaints about reckless driving spiked after the city rolled out a "How's my driving?" consumer awareness campaign in early 2012. But Wallsten's analysis also suggests rudeness and AC problems falling off.
There are two possible explanations for these patterns (and they're not mutually exclusive): The passengers most likely to complain have stopped taking cabs now that they have other options. Or cab drivers have begun to curb the behavior that causes complaints now that they have competition.
If the latter is happening, that would mean that even passengers who don't use services like Uber and Lyft are benefiting from their existence. Whatever else you think of the those companies, they have disrupted this dynamic:
In the traditional taxi world, dissatisfied consumers had few options. They could incur extra costs to avoid taxis — in terms of convenience if switching to the bus or subway or in terms of money if switching to car services or using one’s own car instead of taking cabs. Alternatively, they could complain about the poor service to the taxi regulator. Either way, taxi cabs had little incentive to improve service.