Overregulation in Austria's Passenger Transport Industry?


Guest Commentary by WIFO Economist Michael Böheim in the Daily Newspaper "Die Presse"

WIFO economist Michael Böheim writes in his guest commentary in the daily newspaper "Die Presse" of 12 August 2019 about a "regulation of the passenger transport industry that benefits neither customers nor taxis".

If providers with innovative business models or digital products and services push into regulated markets, an adjustment of the regulatory framework may become necessary. It therefore makes sense to continuously review the regulatory framework in the economic sectors shaped by the digital economy. In many cases, Internet-based business models encounter regulatory barriers of the traditional economic order. A well-known example of this is the "market for commercial passenger transport by car (taxi and rental car)", which is to be sealed off against new digital competition in the arrangement of journeys by means of recent regulatory interventions.

From the point of view of competition policy, however, the focus should not be on protecting established "competitors" from competition, but rather on maintaining the functionality of market-based competition itself. An intelligent adaptation of regulation to the possibilities of digitisation could lead to considerable advantages both for those seeking transport services and for providers ("taxis"). How this could work and why the recent amendment of the Occasional Traffic Act is perhaps well-intentioned, but unfortunately the opposite of well-done, is briefly outlined below.

The complete commentary (in german) can be found here.

The commentary was published as part of the "economic view", a cooperation between Austria's "National Economic Society" and the daily newspaper "Die Presse".

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Michael Böheim

Research groups: Industrial Economics, Innovation and International Competition
© Barna Bartis/Unsplash
© Barna Bartis/Unsplash