At this point, we really shouldn’t need another example of the truly astounding phenomenon of the market.  But we have one in the recent advent of ride-sharing.

Ride-sharing offers an alternative to taxis in many major cities across the United States.  The details vary according to the company, but each has an app that displays a map of all its drivers.  You then decide which driver you want to pick you up, and he or she comes and takes you where you want to go.

These new companies challenge monopolistic taxi licensing.  In my best Milton Friedman impersonation, licensing is a way for the producer group to control entry into its field, enabling it to behave as a monopoly.  We see this clearly in the going rate for a taxi license, which is often hundreds of thousands of dollars.  Licensure stifles competition and harms the consumer.  I buy this argument, but it has its limits.  Some professions, I would contend, necessitate licensure.  In the case of taxi services, safety can be an issue.  Ride-sharing, however, has certain safeguards, such as ratings for each driver.  Further, getting in a ride-share car is a choice.  This contrasts with a field like medicine, where I find Friedmanesque arguments lacking; there is more danger and less of a choice.

Sidecar, one such ride-sharing company, takes the market concept further and allows drivers to set their own prices.  The result: lower prices and higher efficiency.  As these ride-sharing companies grow and spread, the results can only improve.  As the number of drivers increases, wait times will decrease and pricing will become more competitive.  It seems to me that the only potential downside is the safety issue.  Presumably, this is why licensing exists for taxis in the first place.  The presence of choice, however, assuages this worry enough for me.  Let’s unshackle the market and enjoy the benefits.