A Research On Economic Law Regulation Of China’s City Taxi Industry

Taxi is the car which provides services to passengers and charges for passengers according to the mileage and time. The services it provides usually can be subdivided into three categories:cruising segment, stand segment, telephone-booking segment. Because of the confusing interest and the obvious contradiction, taxi transportation service industry has become a focus in today’s China. After2000, the Chinese academia began to focus on the regulations in the taxi field. The regulations mainly include access regulation, price regulation, and quality regulation. Because it involves the complex problems of economics, the economics profession pays more attention than the legal circle. However, most studies only stay at the macro policy calls. Few people settle down to study the unique characteristics of taxi service trade. It can be said that our research in this area is still relatively weak. In this paper, on the basis of comprehensive study in foreign regulatory practice, the author used the theory of economic law to analyze some of the problems which need to be solved immediately in the taxi industry in China for the first time. The author made specific recommendations to improve the regulatory system.Taxi service features include shortcut and direct, convenient, the lower efficiency than the public transportation of large and medium capacity, high mobility, difficulties on manage. From features to study, taxi is not public goods, but it belongs to the weak public welfare product. From category to study, taxi belongs to the cities’public transport system. Taxi is the supplement of medium and large-capacity cities’public transport. Public interest theory, public choice theory, regulatory capture theory, incentive regulation theory can only explain partial phenomena of taxi market. Economic law which defends the whole interests of society has the great significance to clarify the complicated interests of the taxi market. From a purely view of civil or administrative law, it is difficult to come to a satisfactory conclusion. Regulation of the taxi has had a long history in overseas countries. We should study their way seriously. Foreign countries generally attach great importance to the use of legal means to regulate the taxi industry. Its purpose is to maximize social welfare. This perfectly matches with the mission of economic law. To be sure, no country completely abandons taxi regulation. It is a common practice over the world that the state not only confers the necessary powers of regulatory agencies, but also strengthens the constraints of power. For example, the parliament also frequently involves in the regulatory field. The taxi industry in China has experienced three stages:industry shortage stage, lax regulation stage, strict regulation stage. At present we have formed four patterns:self-employed system, affiliated system, contract system; company system. The current problems are as follows:due to the government’s improper intervention, interests of consumer group and driver group are harmed. Taxi operators obtain huge profits, but they do not provide society with satisfactory service. So it is very urgent that we should issue rules about access, price, quality, social responsibility and so on, comprehensively improving the taxi industry regulation of China.City’s taxi access regulation includes restriction of access number and restriction of business organization form. Positive significances of access number restriction include:inhibition of negative externalities such as relieving urban road traffic congestion, reducing the pollution of the environment, improving the efficiency of resource allocation, curbing excessive competition. The negative significances include: part of the social welfare loss, rent-seeking and corruption, the management costs of illegal car. If a city limit the number of taxis, it should give full consideration to the above factors, should calculate whether there is a net gain. Restriction policy itself dose not have a feature of good and evil. The key is how to regulate the behavior of government’s intervention. On the mode of the transferring of a franchise, the author suggests to implement quality competitive bidding system and limited auction system. In terms of business form of regulation, because of the big difference between the repeated game and non repeated game, the company system is helpful to promote competition which has obvious effects in improving service quality. Because of our country’s social credit foundation, industry self-discipline level and the government’s low regulatory capacity, the author suggests practicing company system, not self-employed system. The author claims for company system in large and medium-sized cities. In small city, the government should allow self-employed drivers to exist, and should raise the threshold at the same time.The necessity of the price regulation of urban taxi industry includes:restraining the negative externalities of trades, lowering transaction costs and protecting vulnerable consumers. In some countries, the government set prices. In other countries, companies set prices, but the government should implement indirect regulation against the possible drawbacks. For example, the government limits the number of price competition bodies; implement mandatory price information to public. In China, The existing problems including simplification of price structure, pricing of the simplifying assumptions, formalization of price hearing and so on. We should have a clear goal of the price regulation which distributes price regulation power reasonable and handover main power to taxi commission from price bureau. Besides, we should focus on enhancing the game ability of the consumer groups, perfecting the hearing procedure. We should give priority to local decisions and realize the diversification of the taxi pricing modes.The functions of the quality regulation of service in taxi industry include protecting the interests of the consumers, maintaining the urban public security, showing a good image of the city, promoting the industry’s evolution. We should draw lessons from foreign experience, raise the driver’s threshold to entry, formulate scientific and reasonable quality standards and establish administrative adjudication system to deal with quality disputes. We should strengthen the regulators’authority, change the management confusion. We should conduct stringent quality test to the operators in order to promote the evolution.The social responsibilities of the taxi industry regulation include the driver’s labor protection, the environmental protection, providing universal services, meeting the demand of the disabled community and so on. When pushing corporation system, we should have strict protection for taxi drivers. Taxi companies should be defined as a special company.Taxi company’s internal governance mechanism should be adjusted slightly. We should implement the financial audit and monitor the enterprises’profit level, practice a mandatory system on drivers’rest, implement collective labor contract, support drivers to form enterprise drivers’union and city drivers’union. The government should promote regional taxi and barrier-free taxi to meet the needs of residents at the edge of the city and the needs of the disabled.There is no need to argue for the issue about regulation or deregulation. The pivotal problem is how to regulate the taxi industry. In short, we should implement flexible policy of access and price regulation, stringent policy of quality and social responsibility regulation. The National People’s Congress should promulgate the Taxi Law of the People’s Republic of China. In so doing, we can solve the difficulties that the local governments have met, at the same time we can reserve channel for the deregulation which is likely to happen in future.The taxi law belongs to economic law from its nature. In the aspect of value target.The taxi law should pursue the essential justice and social efficiency, adhere to the unity of economic freedom and economic order. The government should comply with the three principles:legitimate regulation, prudent regulation, maintaining reasonable competition. The central legislation should be provisions of principle and macroscopic, so each city has the right to take flexible measures. We should set up the independent commission of taxi industry regulation, setting out the rights and obligations of the parties which include state, regulators, operators and consumers, the drivers, societies.