They just don’t get it

The ride sharing companies have arrived with a bang in Pakistan, and Uber and Careem are doing good business much to the chagrin of more traditional taxi operators. They are popular with working women, reliable and perhaps most importantly often undercut the rates of other forms of getting around. The cars tend to be clean and modern and are driven by men — and the occasional woman — that takes direction from an onboard GPS system. No more aimless wandering around seeking the destination. The ubiquity of the smart phone in the hands of the expanding middle class, and near-blanket internet coverage in most large cities and many smaller ones means that the potential for business is vast, and it is all evolving a lot quicker than regulatory authorities can get their heads around it.

That there should be regulation of the ride-sharing industry is not in dispute, but those regulations need to be appropriate to a modern and evolving business model. Yes, vehicles should have insurance but price regulation on a service based on demand and flexibility is just not the way to go. Fares in the service are flexible and based on a demand and supply system. Economically, the ability to have variable pricing is similar to that which has driven the rise in budget airlines which alter prices dependent upon demand; but there is an additional point with taxis in that they can and do vary supply significantly dependent upon demand which is the point that is escaping those in the red-tape business.

New technologies enable both the collation and transmission of supply and demand in real time which enables price changes which are again balanced in real time. It would appear that this is a technicality too far for the regulators who lag behind in their understanding of a vibrant and very modern model.

Published in The Express Tribune, August 26^th, 2017.

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