Sharing Economy

The ongoing ride-sharing wars in New York City are interesting to watch because they signal the potential move by state and local officials to use infrastructure management as an indirect form of innovation control or competition suppression. It is getting harder for state and local officials to defend barriers to entry and innovation using traditional regulatory rationales and methods, which are usually little more than a front for cronyist protectionism schemes. Now that the public has increasingly enjoyed new choices and better services in this and other fields thanks to technological innovation, it is very hard to convince citizens they would be better off without more of the same.

If, however, policymakers claim that they are limiting entry or innovation based on concerns about how disruptive actors supposedly negatively affect local infrastructure (in the form of traffic or sidewalk congestion, aesthetic nuisance, deteriorating infrastructure, etc.), that narrative can perhaps make it easier to sell the resulting regulations to the public or, more importantly, the courts. Going forward, I suspect that this will become a commonly-used playbook for many state and local officials looking to limit the reach of new technologies, including ride-sharing companies, electric scooters, driverless cars, drones, and many others.

To be clear, infrastructure control is both (a) a legitimate state and local prerogative; and (b) something that has been used in the past to control innovation and entry in other sectors. But I suspect that this approach is about to become far more prevalent because a full-frontal defense of barriers to innovation is far more likely to face serious public and legal challenges. Continue reading →

By Adam Thierer and Jennifer Huddleston Skees

There was horrible news from Tempe, Arizona this week as a pedestrian was struck and killed by a driverless car owned by Uber. This is the first fatality of its type and is drawing widespread media attention as a result. According to both police statements and Uber itself, the investigation into the accident is ongoing and Uber is assisting in the investigation. While this certainly is a tragic event, we cannot let it cost us the life-saving potential of autonomous vehicles.

While any fatal traffic accident involving a driverless car is certainly sad, we can’t ignore the fact that each and every day in the United States letting human beings drive on public roads is proving far more dangerous. This single event has led some critics to wonder why we were allowing driverless cars to be tested on public roads at all before they have been proven to be 100% safe. Driverless cars can help reverse a public health disaster decades in the making, but only if policymakers allow real-world experimentation to continue.

Let’s be more concrete about this: Each day, Americans take 1.1 billion trips driving 11 billion miles in vehicles that weigh on average between 1.5 and 2 tons. Sadly, about 100 people die  and over 6,000 are injured each day in car accidents. 94% of these accidents have been shown to be attributable to human error and this deadly trend has been increasing as we become more distracted while driving. Moreover, according to the Center for Disease Control and Prevention, almost 6000 pedestrians were killed in traffic accidents in 2016, which means there was roughly one crash-related pedestrian death every 1.6 hours. In Arizona, the issue is even more pronounced with the state ranked 6th worst for pedestrians and the Phoenix area ranked the 16th worst metro for such accidents nationally. Continue reading →

On June 9th, the Federal Trade Commission hosted an excellent workshop on “The ‘Sharing’ Economy: Issues Facing Platforms, Participants, and Regulators,” which included 4 major panels and dozens of experts speaking about these important issues. It was my great pleasure to be part of the 4th panel of the day on the policy implications of the sharing economy. Along with my Mercatus colleagues Christopher Koopman and Matt Mitchell, I submitted a 20-page filing to the Commission summarizing our research findings in this area. (We also released a major new working paper that same day on, “How the Internet, the Sharing Economy, and Reputational Feedback Mechanisms Solve the ‘Lemons Problem.’” (All Mercatus Center research on sharing economy issues can be found on this page and we plan on releasing additional papers in coming months.)

The FTC has now posted the videos from their workshop and down below I have embedded my particular panel. My remarks begin around the 5-minute mark of the video.