A Reflection on the Taxi Reform in China: Innovation vs. Tradition

Computer Law & Security Review, Forthcoming

12 Pages Posted: 29 May 2019

See all articles by Jian Li

Jian Li

Shanghai Jiao Tong University (SJTU) - KoGuan Law School

Liyang Hou

Shanghai Jiao Tong University (SJTU) - KoGuan Law School

Date Written: May 3, 2019

Abstract

In contrast to the hostility shown in some other countries towards one of the most important examples of a sharing economy service, namely car hailing, China has always kept an open-minded attitude to this innovative Internet business model. After having been tolerant of unlicensed operations for years, China reformed the taxi industry by legalising car hailing in 2016. However, this process of reform was heavily affected by the political pressure generated by the drivers of traditional taxis. Following this reform, the taxi industry in China has been separated into two independent markets: one for traditional taxis and another for car hailing services. The Chinese experience provides a unique opportunity to study the sharing economy. This article comprises of a full evaluation of the abovementioned reform, with a specific focus on a number of characteristics specific to the taxi industry. We observed that quantity control of vehicles is still necessary in the Internet era due to imperfect competition and information asymmetries. Though the taxi reform in China has in some regards been beneficial, it has also had the unfortunate effect of preventing the taxi industry from taking full advantage of the benefits of the sharing economy. Consequently, we propose that the various levels of Chinese government should first establish a level playing field for traditional taxis and car hailing, and second, devise a mechanism to closely monitor the quantity of vehicles in the taxi market.

Keywords: Sharing Economy, Car Hailing, Taxi, Quantity Regulation, China

Suggested Citation

Li, Jian and Hou, Liyang, A Reflection on the Taxi Reform in China: Innovation vs. Tradition (May 3, 2019). Computer Law & Security Review, Forthcoming. Available at SSRN: https://ssrn.com/abstract=3382592

Jian Li

Shanghai Jiao Tong University (SJTU) - KoGuan Law School ( email )

1954 Huashan Road
Xuhui District
Shanghai, Shanghai 200030
China

Liyang Hou (Contact Author)

Shanghai Jiao Tong University (SJTU) - KoGuan Law School ( email )

Huashan Road 1954
Xuhui District
Shanghai, Shanghai 200030
China
+86-21-6293-4632 (Phone)

HOME PAGE: http://law.sjtu.edu.cn/TeacherDetail123.aspx

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