Price Controls Are Bad

Economists often disagree. One subject on which there is near universal agreement is price controls. They’re bad. Price controls stifle innovation and punish consumers. In Washington D.C., a company called Uber has been offering upscale transport that competes directly with taxicabs. Uber says a new service they want to offer may well be outlawed tomorrow by the D.C. City Council:

On Independence Day, Uber announced a roll out of a lower cost service that we call UberX. A less expensive Uber option on an all-hybrid fleet. We’re pretty excited about it and think it’s a great idea for cities across the country. What some of you probably noticed is that there was no roll out of this service in the District. That is because, only days earlier, the DC City Council informed us that they intended to pass an amendment to the taxi modernization bill that would make it illegal for Uber to lower its prices or to offer a low cost service in any form.

Uber claims the city council wants to force them to offer this new service at a minimum price of five times the price of a comparable taxicab ride. They’re calling this language the “Uber amendment.”

This kind of effort by local officials to protect incumbent businesses isn’t unprecedented. The Institute for Justice has done a great deal of work challenging exactly these kinds of price controls in other cities. I wouldn’t be surprised if they jump in here, as well.

The D.C. City Council may vote on the amendment tomorrow. Uber would like it if D.C. residents who care about competition in transportation services called their representatives.