Taxi Cartels in Portland

Monday, March 26th, 2012

My intern Jessica Greene has another piece at Huffington Post on protectionist regulation aimed at driver services, this time in Portland, Oregon.

Instead of a taxicab across town, you could take a clean, upscale Town car for the same price. But despite car services in many cities ready to take you, new regulations designed to protect big taxi companies are preventing them from doing so.

This is especially true in Portland, Ore., where regulators have waged an aggressive crackdown on car services, also known as livery drivers . . .

In Portland, livery services must charge a minimum fare of $50, and receive reservations at least an hour in advance of pick-up. The law, which went into effect in 2009, also prohibits them from parking in front of hotels. Livery vehicles must charge a minimum rate 35 percent higher than competing taxi companies for any ride outside the city. The fine for violating the ordinance is $500 for the first offense, $1,000 for the second and suspension of permits for a third.

The sheer absurdity of these laws comes into focus when you consider that livery services can’t even market themselves with coupons or discounts.

In September, two Portland livery companies were initially fined nearly a million dollars and faced losing their businesses for offering a promotion on Groupon, the popular online coupon site. Fiesta Limousine and Pacific Cascade Towncar offered a Groupon for one-time limo or sedan rides at $32, well under the mandated minimum fare. After the offer went live, Portland taxi companies complained to the city. City officials responded with threatening letters to Fiesta and Pacific, and insisted that Groupon remove the promotion. The city then fined Pacific $659,000 and Fiesta Limousine $250,000, based on the number of Groupons sold. The companies were told that if they honored the Groupons, they’d lose their operating permits. Both companies escaped the harsh fines by refunding the Groupons, but each still paid a $500 fine for advertising services under the minimum fare.

And in Portland, city officials don’t even pretend that the law is anything but sheer protectionism for taxi companies.

Frank Dufray, administrator for Portland’s Private-for-Hire Transportation Program, which regulates both taxi and livery services, said the laws aren’t intended to help consumers or the city, but to protect market share for the taxi industry. “The main thing is that you don’t want the Town cars to take all of the best fares, which are to the airport, and not leave any for the taxi industry,” he said. “That’s why there’s a minimum fare and a one-hour wait requirement.”

Exactly how do consumers benefit by protecting taxis, who in many cases appear to offer worse service for a higher price?

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17 Responses to “Taxi Cartels in Portland”

  1. #1 |  Burgers Allday | 

    I got very sick a couple years ago trying unsuccessfully to get a cab in Portland during some unexpectedly unclement weather.

    Probably just happenstance. When a cab finally came, the driver was nice and gregarious, as they usually seem to be in Portland in my limited experience, but I was being overrun with sickness even as we rode on through the cold, rainy night together.

    This is probably off-topic.

  2. #2 |  picachu | 

    Perhaps any Agitator readers who live in Portland could send this story to their city council and mayor? I do that shit around here but nobody pays any attention because the stories aren’t specifically about my city.

  3. #3 |  Same old Same Old | 

    This is exactly what is happening in Austin. Same thing with no attempt to cover up the fact that it’s a taxi protection measure. And the big companies are eager to do it because they think it will boost their revenue, in contravention of Econ 101.

  4. #4 |  Brandon | 

    #3, they don’t care if it boosts their revenue, they’re willing to take a bare minimum profit as long as they don’t have to compete for it.

  5. #5 |  tired dog | 

    Portland, paradise of urban growth boundaries (the better to raise property costs beyond affordability), trams with forever tax subsides, densification and any number of top down command and control rent seeking schemes.

  6. #6 |  Puzzling | 

    Apple is seeking to put a new “glass box” store design in downtown Portland, knocking down part of the space formerly occupied by a Saks Fifth Avenue. Like a previous attempt in, Apple may have to shelve the project due to government objections:

    http://www.ifoapplestore.com/db/2012/02/28/apple-proposes-spectacular-store-for-portland/

    As for Apple’s plan to rid the sidewalk of all furniture, bike racks, benches, planters and other obstructions, both Wark and commission chair Guenevere Millius offered objections. Millius said the proposal was an “overly controlling approach to what’s in our environment.” Wark agreed, saying, “The tone of it is, let’s change everything around us so it’s our environment, and not necessarily Portland’s environment.” Millius summed it up: “I’m not sure sweeping all the street furniture out is acceptable to me. I would like some justification.” …

  7. #7 |  JSL | 

    #2, it wouldn’t really be worth the time to do so. Sam Adams and the council are corrupt as hell.

  8. #8 |  Burgers Allday | 

    @8: he did get interviewed for the Chasse docu Alien Boy, I think. I had know the Wipers song, and also about Chasse, but I never connected the two.

  9. #9 |  glasnost | 

    I have to agree with this more or less completely.

  10. #10 |  picachu | 

    JSL “#2, it wouldn’t really be worth the time to do so. Sam Adams and the council are corrupt as hell.”

    You know what would fix that don’t you? A new law that forbids anyone named after a beer from holding public office!

  11. #11 |  Marty | 

    #10- good point. I’m surprised the Sam Adams Brewery hasn’t filed some kind of injunction against Sam Adams the politician for acting like a douche in office and sullying their good name.

  12. #12 |  croaker | 

    I doubt such a lawsuit would prevail but it would certainly garner attention.

  13. #13 |  Nathanael | 

    This sort of local regulation is awful; I’m with the liberal group who thinks that the worst regulations tend to come from the local level.

    But what’s to stop the livery companies from just becoming taxi companies? If it’s a matter of registering as a taxi company, submitting to inspections, and paying a tax or fee, why don’t they just DO it?

    Is it like New York City, with its indefensible medallion system designed to restrict provision of taxis and turn medallion ownership into a valuable property right? (Property sucks. Turning something which isn’t a property right into one should only be done if there’s a very good reason to.) If there’s a deliberate restriction on access to “taxi” status in Portland, target THAT.

    If not, it makes you wonder what the livery companies are trying to avoid. They’re trying to evade something. What is it? Standards for quality of service? Requirement to take street hails?

    As for Apple and its proposal to throw out the street furniture, that’s unjustifiable, and to hell with Apple. If it doesn’t understand the concept of public space, it had better go away.

  14. #14 |  Nathanael | 

    Ohhh, I get what’s going on. Read between the lines. The livery companies want to offer ONLY the most profitable trips, while REFUSING to take people between other points in Portland. If the livery companies were allowed to take all the most profitable trips, then the taxi companies would go bankrupt and it would become impossible to get a taxi between two random points in Portland.

    The livery companies are refusing to register as taxi companies because they don’t want to serve arbitrary trips between two points in Portland.

    Well, to hell with the livery companies. Cherry-picking “the best” for one private company just means the government ends up having to pay for the rest of the service throughout town (LEMON SOCIALISM), or means that there is substandard, terrible taxi service in the town (which just hurts everyone).

    As a *liberal* I think the way to deal with this is in fact to provide a government transportation monopoly, but the current “regulated utility” model of taxis works well enough; “deregulation” would break it and provide dreadful taxi service throughout town, like it has in so many other arenas.

    Transportation is a public utility. It needs to be regulated.

  15. #15 |  Nathanael | 

    Notice that cartels with government licenses (regulated utilities) are the traditional “right-wing” solution to underprovision of public services; the traditional “left-wing” solution is direct government provision of public services, which is cheaper and more reliable, though it has its own problems (it tends towards OVERprovision of service).

    The “deregulation” proposal simply doesn’t deal with the problem, and leaves us with socially disastrous underprovision of public services. It’s not intellectually sane.

    I’d be happy to see another proposal which actually solves the problem, but I don’t think there are any.

  16. #16 |  Un Assortiment Fascinant des Articles Trouvés Enligne | ICED BORSCHT | 

    [...] Taxi Cartels in Portland (theagitator.com) [...]

  17. #17 |  Saturday Links | The Agitator | 

    [...] The Institute for Justice is fighting Portland’s ban on Groupons. You read about it here first. [...]

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