Ride-sharing apps like Uber and Lyft have faced major oppositionfrom existing taxi services as they have expanded
Question:
Ride-sharing apps like Uber and Lyft have faced major oppositionfrom existing taxi services as they have expanded into new cities,and in some cases have been banned and prevented from entering.Often, the cities banning these services have a small number oflarge preexisting taxi companies. Consider a hypothetical city inwhich the two major preexisting taxi companies stand to lose$350,000 in joint profit if these ride-sharing services enter andcompete. Assume the benefit to consumers in the form of lowerprices for rides would be a total of $450,00
Answer the following questions regarding this possible law.
From the standpoint of economic efficiency, banning competitionfrom ride sharing services is economically(efficient/inefficient)
Banning the entry of these ride sharing services would createBanning the entry of these ride sharing services would createBanning the entry of these ride sharing services would create(concentrated beliefs and cost),(widespread benefit and widespreadcost), (widespread benefits and concentrated costs), (concentratedbenefits and widespread costs)
Because the small number of existing taxi companies would bewilling to spend up to (350,000)/(450,000)/(250,000)/(150,000) inexpenditures to lobby the government to ban these services, whilethe thousands of consumers would likely either not know about thepolicy or would not find it worthwhile to lobby, the specialinterest legislation banning ride-sharing services would probably(fail/pass) if subjected to political decision making.
Expert Answer:
From the standpoint of economic efficiency banning competition from ridesharing services ... View the full answer
