Institute of Transportation, MOTC

      With the widespread usage of the Internet and smartphones, the rise of ride-sourcing services offers new avenues for creating wealth but challenges existing incumbents and regulation structures. Ride-sourcing is an app-based on-demand ride service that matches passengers and drivers with unused vehicles and spare time to create extra income. Facing multiple legal and social hurdles in ride-sourcing, many countries, for example, Germany, France, Spain, and Taiwan have (nearly) banned such services nationwide. However, some countries and areas such as China, the Philippines, and California embrace these innovative services. This study examines the economic and social regulations of ride-sourcing services in Asia, and five analysis criteria, including supply and demand, transaction cost, externalities, safety, and privacy are adopted as the research framework. Five economies, including Asia, Singapore, Philippines, China, Japan, and Taiwan are used as case studies to investigate how ride-sourcing service influences transportation incumbents, how governments respond to this innovative service, and what legal and social issues this service has generated.
The main results are summarized as follows: When faced with ride-sourcing services, these governments made decisions on the legalization of the services mainly based on the supply and demand in the existing taxi market. In cases where taxi services were oversupplied, ride-sourcing services were made illegal. In cases where there was an excess demand for taxi services, these services were legalized to effectively resolve the shortage of taxi services. There were two methods used to legalize ride-sourcing services: revising the existing regulations to accommodate the new services and adding a new service classification in the existing regulations. On the economic regulation side, ride-sourcing services balanced the supply and demand with raises prices, responded to the real-time demand across the city, and encouraged more drivers to enter the market during rush hour. The services reduced transaction costs and made the market more efficient by reducing searching costs via an algorithm matching customers’ requests with available drivers. Some positive externality effects occurred but brought other negative externality problems to both the society and taxi industry. On the social regulation side, the countries that made ride-sourcing services legal set safety standards on company and driver qualifications in order to protect customers. Two privacy invasion incidents forced all ride-sourcing companies to strengthen their private protections. Finally, this study provides feasible regulatory guidelines that governments could adopt when considering legalization of ride-sourcing services.