Essay about The Taxi Industry in New South Wales

618 Words3 Pages
The Taxi Industry in New South Wales has been one that has involved very little competition within its market, allowing prices for its services to be quite high. Now, however with the advancing technology, the rise of App-based taxi or Ride Sharing services such as Uber threaten to provide substitutes to customers increasing competition in the Taxi Industry. The NSW Taxi Industry is somewhat run by the NSW Government (Abelson). There are three major companies, that as (Abelson) states, ‘Control 90% of the Taxi operators in Sydney’. As a result an oligopoly market structure is formed, as there is some competition between these major companies within the Taxi Service industry. However due to ‘allegiances’ (Abelson) that these companies…show more content…
As a result the major companies lose some of the market power that they held, meaning that they will have greater price elasticity and can no longer charge prices at the heights that they could if there wasn’t any competition, as customers will be offered a cheaper substitute. This then will lead to a change in the market structure as pressure will be placed on the allegiances formed between the major companies in order to compete with the new ride-sharing services. These ride-sharing services also do not incorporate any fees for entry such as the license fees associated with the traditional taxi service industry, which then, due to competition, could result in a lowering of these fees, causing less profits for the large companies in the taxi service industry. This will also lead to lower prices charged once again. It could also cause ride-sharing companies to become more appealing for the Taxi Service drivers and they could poach them from these larger companies. So as a result of this now competitive taxi market, there is a lower profit for the taxi service industry ‘infuriating them’ (Ben Grubb 2014) and leading them to strongly oppose the addition of these app-based ride-sharing services. There has been some evidence of the benefits of allowing these ride-sharing services to provide competition in the taxi service market. An example of this is in New York where according to (Tim Worstall 2014), drivers for ride sharing services such as Uber
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