Essay about The Taxi Industry in New South Wales

618 Words 3 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…
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 have with each other, they are able to work together creating an almost monopolistic market where they are able to hold some market power without the threat of competing companies taking customers from them as a result of having lower prices. These are however somewhat regulated by the Government as they do influence prices in regards to taxi fares, to which each taxi service must obey.

Due to the Taxi Service industry resembling an oligopoly, with monopolistic qualities, there are many implications on the welfare of this market structure. In the Taxi industry, it is necessary for new entrants into the market, according to
(Saulwick 2014) to pay $400 000 as a license fee. This itself leads to necessary price rises as a result of the