In our Meet Rideshare series, our Environment post went into some detail about the Local Pollutants we hope Rideshare can reduce. However, I thought we skimped a bit on the Climate Change aspect of it. I thought we might go into a little more detail today about Rideshare’s climate impact and why, in a world where climate change is the first thought of many an environmentally conscious consumer, Rideshare is not playing up this aspect of its business more.
Rideshare is committed to being an environmentally responsible company, and to being a force for good in the world, while still returning a good profit for our investors. However, the reason we don’t play up the climate change aspect of our business more is simply because we cannot make the same impact on Climate Change as we can on Local Pollutants.
To understand why this is, recall from our earlier post that unlike Nitrous Oxides or Mercury, Carbon is not a local pollutant. That is, carbon emissions affect the whole planet, and in the exact same way and to the same degree, regardless of where they have been emitted from. Climate change is thus the sum of ALL carbon emissions from all over the planet. Although Rideshare’s service will indeed reduce carbon emissions just as it will reduce emissions of other pollutants, these reductions will not have the same impact as they would in the case of other pollutants. The climate change we experience is just as much a result of China’s emissions as of ours, and vice versa. While Rideshare will reduce the amount of carbon emissions in the city of Los Angeles considerably, that does the city of Los Angeles little good. It represents only a drop in the bucket of ALL the carbon emissions of the world, which is the only number that matters.
Nevertheless, no one should doubt that Rideshare does have a positive impact on climate change. Every gallon of gasoline we save by keeping a car at home reduces carbon emissions by roughly 20 pounds of CO2 equivalent. The best way to think about this might be to translate that figure into a dollar value. Currently several companies offer carbon offsets for roughly $10/short ton, or roughly $0.01 per gallon of gasoline. Each corporate commuter who leaves his own car in the garage and rides with someone else is saving roughly 3 gallons of gasoline a day on average(20 miles each trip plus idling delays). Divided evenly between the driver and the passenger, this translates to roughly $0.015 per day of carbon “benefits”. However, many experts have suggested that the market undervalues carbon offsets, because the United States does not currently cap carbon emissions. According to the Environmental Defense Fund, a more “socially responsible” carbon cost(i.e. one that accounts for all the negative externalities of carbon) would be $80/short ton, which would translate into daily benefits of $0.18 per member, or roughly $90 per year assuming they used our service regularly.
Friday, June 1, 2012
Thursday, May 10, 2012
Car Savings
In discussing the potential savings from using our service, we have focused a lot on what a businessman would call “operational expenditures.” These are the expenses that are incurred on a day to day basis to carry out daily activities. Watching my own father get to work every day, though, I wonder if I missed out on a potential big savings that might be the biggest of all. This savings would be more properly characterized as a “capital expenditure”, or an expenditure of funds to procure something which will serve for a number of years.
Simple question: How many people, if they signed up for our service, could do with one less car in the family?
In a country with 308 million people in it, there are a little over 200 million cars and light trucks in operation. Given that roughly 60 million people in this country are too young to drive, and that there are a little over 24 million people who have a severe disability making it difficult or impossible to drive themselves, and just about everyone who can drive a car owns one. This will come as no surprise to California residents, who have probably seen every one of them during rush hour in Los Angeles. But given that fact, it seems logical that a high number of corporate commuters(who after all do not need to go anywhere except to and from work during the busiest times of day) own one of their cars solely for the purpose of getting themselves to and from work. If Rideshare could furnish a convenient and reasonably priced alternative to doing that, corporate commuters might be able to save on the costs of the car completely by not replacing the oldest car in their family when it dies. That would represent a major savings and an additional incentive to use our service.
So just how much would the average corporate commuter save if they had one less car in the garage?
Kelley Blue Book has the average price of a new car in 2011 around $30,000. Of course, not everyone buys cars new. But for everyone who buys a used car there is someone who sells one, and then has to replace it with a new one, so any reduction in the total demand for cars will ultimately find its way into the new car market. Now, not everyone who uses our service will reduce the number of cars in their family, obviously, but let’s take that number and calculate the savings for someone who does.
At current interest rates, interest expense for buyers with good credit are very low, so to reduce the math here and to be conservative with our estimates, we’ll set the interest cost at 0 and just use the purchase price. A five-year loan is most common, so that’s 60 months. A person who elected to forego a new car and its five year payment plan would save $500 a month in car payments. New cars need an oil change once every five months(the so called experts used to say three, now its five), which costs about $30. So that’s $6 more a month in oil changes. Figure a one-time tune-up when the car hit the 50,000 mile marker. Let’s be conservative again and say that’s only $500. Throw in new tires and new brakes once every couple of years, insurance for the extra vehicle. All told, you get something like this:
Car Payment $500
Oil Change $6
Tune-up(monthly distributed cost) $6.33
New tires(monthly distributed cost) $7.67
Brakes(monthly distributed cost) $5
Insurance $95
I made the new tires $460 and $300, since those are the conservative numbers for good quality of both, which new car buyers usually spring for. If our member foregoes the purchase of a used car, the car payment is lower, but the maintenance and repair costs are higher. So figure everyone comes to around $620 a month in car savings. That outweighs even the other savings we discussed in our Meet Rideshare series. While obviously not everyone will take advantage of these savings, the very high penetration of car ownership amongst possible buyers(upwards of 90% according to the data above) means that quite a few of them might. Add the cost of fuel and that number is around $8,000 a year or 15% - 25% of an individual's income for the cost of transportation.
Simple question: How many people, if they signed up for our service, could do with one less car in the family?
In a country with 308 million people in it, there are a little over 200 million cars and light trucks in operation. Given that roughly 60 million people in this country are too young to drive, and that there are a little over 24 million people who have a severe disability making it difficult or impossible to drive themselves, and just about everyone who can drive a car owns one. This will come as no surprise to California residents, who have probably seen every one of them during rush hour in Los Angeles. But given that fact, it seems logical that a high number of corporate commuters(who after all do not need to go anywhere except to and from work during the busiest times of day) own one of their cars solely for the purpose of getting themselves to and from work. If Rideshare could furnish a convenient and reasonably priced alternative to doing that, corporate commuters might be able to save on the costs of the car completely by not replacing the oldest car in their family when it dies. That would represent a major savings and an additional incentive to use our service.
So just how much would the average corporate commuter save if they had one less car in the garage?
Kelley Blue Book has the average price of a new car in 2011 around $30,000. Of course, not everyone buys cars new. But for everyone who buys a used car there is someone who sells one, and then has to replace it with a new one, so any reduction in the total demand for cars will ultimately find its way into the new car market. Now, not everyone who uses our service will reduce the number of cars in their family, obviously, but let’s take that number and calculate the savings for someone who does.
At current interest rates, interest expense for buyers with good credit are very low, so to reduce the math here and to be conservative with our estimates, we’ll set the interest cost at 0 and just use the purchase price. A five-year loan is most common, so that’s 60 months. A person who elected to forego a new car and its five year payment plan would save $500 a month in car payments. New cars need an oil change once every five months(the so called experts used to say three, now its five), which costs about $30. So that’s $6 more a month in oil changes. Figure a one-time tune-up when the car hit the 50,000 mile marker. Let’s be conservative again and say that’s only $500. Throw in new tires and new brakes once every couple of years, insurance for the extra vehicle. All told, you get something like this:
Car Payment $500
Oil Change $6
Tune-up(monthly distributed cost) $6.33
New tires(monthly distributed cost) $7.67
Brakes(monthly distributed cost) $5
Insurance $95
I made the new tires $460 and $300, since those are the conservative numbers for good quality of both, which new car buyers usually spring for. If our member foregoes the purchase of a used car, the car payment is lower, but the maintenance and repair costs are higher. So figure everyone comes to around $620 a month in car savings. That outweighs even the other savings we discussed in our Meet Rideshare series. While obviously not everyone will take advantage of these savings, the very high penetration of car ownership amongst possible buyers(upwards of 90% according to the data above) means that quite a few of them might. Add the cost of fuel and that number is around $8,000 a year or 15% - 25% of an individual's income for the cost of transportation.
Wednesday, May 2, 2012
Highways as Public Goods
And why are highways, unlike so many other forms of investment, deserving of public support for their construction and maintenance?
Let’s start with why highways are publicly supported. Transportation links are different from most other forms of private investment because transportation links generate large spillover benefits(the technical term economists use is “positive externalities”) for the general public. Spillover benefits are essentially third party benefits. When you get a vaccination against a contagious disease, for example, the doctor gets a benefit(what you paid for the vaccination), and you get a benefit as well (a higher probability of staying in good health). But the rest of the general public gets a benefit as well. They also are more likely to stay in good health because of your being vaccinated, since if you don’t get sick they can’t catch the disease from you. However, the private market, which communicates via prices paid, doesn’t see external benefits to third parties. It only sees the benefits to the people who are actually paying and receiving the money changing hands. This means that the private market sees all the costs of vaccination(the doctor will incorporate those costs into the price of the vaccine) but only part of the benefits(the patient will not pay for the good health of others, only his own good health). So the private market underestimates the benefits of vaccination and how much vaccination is socially efficient. Highways also generate substantial third party benefits. What this means is that if the private market was left to it’s own devices it would underfund the highway system, making less investment in it than it should.
The spillover benefit of a highway system, or any transportation system for that matter, actually has a lot of different names among economists. Two of my college professors call it “market expansion”, others call it “competition support”, etc. But it might be best to illustrate just with another example.
Say there are two cities, each with one car manufacturer plant in them. There are no highways to travel between these two cities(though there must be roads within the cities that they use, or else there wouldn’t be a car manufacturer right?) Because there are no inter-city roads, each car manufacturer has a monopoly on car sales in their city. Each car costs $10,000 to make, including fair return on capital, and each customer in the city derives a benefit of $15,000 from their car. This means that the car manufacturers in each city are deriving $5,000 in monopoly profits on each car. They sell each car for the full $15,000 that a customer is willing to pay, because there is no competition to force them to charge a fair price closer to the actual cost of production.
What, you say, does any of this have to do with highways? Let’s say there are 50,000 cars sold in each city each year. Also say that a highway costs $20 million to build between the two cities and will last for 20 years. And finally, say it costs $100 to drive a car from one city to the other.
With a highway now built and a cost of $100 to move a car from one city to the other, prices start to fall. TWO car manufacturers are now competing with one another. They begin to offer lower prices hoping to win away customers from the other manufacturer. As each cuts prices, customers benefit. Eventually prices will fall to $10,100. Why? Because that is the cost of going to get your car in the other city if the car manufacturer is not offering you a good deal. $10,000 to build the car, plus $100 to ship it to the other city.
But wait a minute. Each car manufacturer has one last insight. “If my competitor CANNOT charge less than $10,100 without losing money, than I have an advantage in my own city. I don’t have to pay the $100 to ship the car on the highway when I am selling to customers in my own city. So I can charge $10,099 to customers in my own city and they will never buy a car from the other city, since it will always be cheaper to buy it here.” So the price drops to $10,099.
BUT, that means NO ONE is shipping cars on the highway. Those car buying customers are not contributing one dollar towards the highway that is saving them $5 million a year total in car costs.
Highways have large, uncompensated positive externalities because they increase the size of markets. They bring many smaller markets together to form one larger market with more competition and lower prices for consumers. But because what actually travels on the highway is only a small fraction of the goods that have seen their prices drop, highway builders are never fully compensated for this market effect. This persistent underfunding of transportation links is what necessitates public investment in the nation’s transportation infrastructure.
Let’s start with why highways are publicly supported. Transportation links are different from most other forms of private investment because transportation links generate large spillover benefits(the technical term economists use is “positive externalities”) for the general public. Spillover benefits are essentially third party benefits. When you get a vaccination against a contagious disease, for example, the doctor gets a benefit(what you paid for the vaccination), and you get a benefit as well (a higher probability of staying in good health). But the rest of the general public gets a benefit as well. They also are more likely to stay in good health because of your being vaccinated, since if you don’t get sick they can’t catch the disease from you. However, the private market, which communicates via prices paid, doesn’t see external benefits to third parties. It only sees the benefits to the people who are actually paying and receiving the money changing hands. This means that the private market sees all the costs of vaccination(the doctor will incorporate those costs into the price of the vaccine) but only part of the benefits(the patient will not pay for the good health of others, only his own good health). So the private market underestimates the benefits of vaccination and how much vaccination is socially efficient. Highways also generate substantial third party benefits. What this means is that if the private market was left to it’s own devices it would underfund the highway system, making less investment in it than it should.
The spillover benefit of a highway system, or any transportation system for that matter, actually has a lot of different names among economists. Two of my college professors call it “market expansion”, others call it “competition support”, etc. But it might be best to illustrate just with another example.
Say there are two cities, each with one car manufacturer plant in them. There are no highways to travel between these two cities(though there must be roads within the cities that they use, or else there wouldn’t be a car manufacturer right?) Because there are no inter-city roads, each car manufacturer has a monopoly on car sales in their city. Each car costs $10,000 to make, including fair return on capital, and each customer in the city derives a benefit of $15,000 from their car. This means that the car manufacturers in each city are deriving $5,000 in monopoly profits on each car. They sell each car for the full $15,000 that a customer is willing to pay, because there is no competition to force them to charge a fair price closer to the actual cost of production.
What, you say, does any of this have to do with highways? Let’s say there are 50,000 cars sold in each city each year. Also say that a highway costs $20 million to build between the two cities and will last for 20 years. And finally, say it costs $100 to drive a car from one city to the other.
With a highway now built and a cost of $100 to move a car from one city to the other, prices start to fall. TWO car manufacturers are now competing with one another. They begin to offer lower prices hoping to win away customers from the other manufacturer. As each cuts prices, customers benefit. Eventually prices will fall to $10,100. Why? Because that is the cost of going to get your car in the other city if the car manufacturer is not offering you a good deal. $10,000 to build the car, plus $100 to ship it to the other city.
But wait a minute. Each car manufacturer has one last insight. “If my competitor CANNOT charge less than $10,100 without losing money, than I have an advantage in my own city. I don’t have to pay the $100 to ship the car on the highway when I am selling to customers in my own city. So I can charge $10,099 to customers in my own city and they will never buy a car from the other city, since it will always be cheaper to buy it here.” So the price drops to $10,099.
BUT, that means NO ONE is shipping cars on the highway. Those car buying customers are not contributing one dollar towards the highway that is saving them $5 million a year total in car costs.
Highways have large, uncompensated positive externalities because they increase the size of markets. They bring many smaller markets together to form one larger market with more competition and lower prices for consumers. But because what actually travels on the highway is only a small fraction of the goods that have seen their prices drop, highway builders are never fully compensated for this market effect. This persistent underfunding of transportation links is what necessitates public investment in the nation’s transportation infrastructure.
Friday, April 27, 2012
EPA Climate Change Report
http://epa.gov/climatechange/emissions/downloads11/US-GHG-Inventory-2011-Executive-Summary.pdf
The United States Environmental Protection Agency released its annual Greenhouse Gas Inventory, basically a compilation of all the data we have of all carbon emissions from all sources in the U.S. As we’ve discussed, Rideshare does not have the same impact on climate gases as it does on Local Pollutants, but as an environmentally responsible company we wanted to give a shout-out to the results anyway.
Power Plants continue to represent an ever larger share of total U.S. emissions, as high gas prices and tighter fuel efficiency regulations reduce U.S. emissions growth from the Transportation sector. Power plants now constitute 42% of all carbon emission in the United States, up from approximately 1/3 of emissions in the 2000 report. Transportation represents about 34%, about the same as a decade ago, although a smaller proportion than a few years ago. The other major sources are certain industrial production activities, including glass, cement, and steel production, as well as deforestation. Agriculture is also a major contributor to greenhouse gas emissions, both from deforestation and other land use pattern changes as well as the more intensive utilization of nitrates and other fertilizers to boost crop production per acre. Ironically, one of the things incentivizing farmers to use more climate changing nitrates is the high price of corn caused by the ethanol industry, which was originally supposed to reduce carbon emissions.
The United States Environmental Protection Agency released its annual Greenhouse Gas Inventory, basically a compilation of all the data we have of all carbon emissions from all sources in the U.S. As we’ve discussed, Rideshare does not have the same impact on climate gases as it does on Local Pollutants, but as an environmentally responsible company we wanted to give a shout-out to the results anyway.
Power Plants continue to represent an ever larger share of total U.S. emissions, as high gas prices and tighter fuel efficiency regulations reduce U.S. emissions growth from the Transportation sector. Power plants now constitute 42% of all carbon emission in the United States, up from approximately 1/3 of emissions in the 2000 report. Transportation represents about 34%, about the same as a decade ago, although a smaller proportion than a few years ago. The other major sources are certain industrial production activities, including glass, cement, and steel production, as well as deforestation. Agriculture is also a major contributor to greenhouse gas emissions, both from deforestation and other land use pattern changes as well as the more intensive utilization of nitrates and other fertilizers to boost crop production per acre. Ironically, one of the things incentivizing farmers to use more climate changing nitrates is the high price of corn caused by the ethanol industry, which was originally supposed to reduce carbon emissions.
Friday, April 20, 2012
Airport Shuttles
Although most corporate commutes involve traveling from home to the office, a substantial portion of our customer base is asked to travel for work from time to time. As such, Rideshare is interested in establishing routes not only from residential areas to commercial areas, but also from residential areas to airports. In order to give our members some idea of the savings that would be possible in such a scenario, we’re going to spend a little time breaking down the numbers.
Anyone traveling to the airport who doesn’t have a friend or relative to drop them off will incur either two cab fares or a gasoline bill and a parking bill(if they drive themselves). Since parking costs are paid by day and cab fares are flat rate, obviously the more days you are gone the more sense it makes to take a cab instead of driving yourself. Conversely, the further away you live from the airport the less sense it makes to take a cab, since cabs charge per mile fares and your savings driving yourself over a cab go up the further away from the airport you live.
Whether you are commuting to the office or commuting to the airport to work in another city, Rideshare can help accommodate and help save the corporate commuter time and money.
Anyone traveling to the airport who doesn’t have a friend or relative to drop them off will incur either two cab fares or a gasoline bill and a parking bill(if they drive themselves). Since parking costs are paid by day and cab fares are flat rate, obviously the more days you are gone the more sense it makes to take a cab instead of driving yourself. Conversely, the further away you live from the airport the less sense it makes to take a cab, since cabs charge per mile fares and your savings driving yourself over a cab go up the further away from the airport you live.
Whether you are commuting to the office or commuting to the airport to work in another city, Rideshare can help accommodate and help save the corporate commuter time and money.
Saturday, April 14, 2012
Atlanta Highway Comparison
With things getting closer to launch in Los Angeles I just thought we might talk a little bit about Rideshare’s plans for future growth outside of California. I also thought this might be a good time to take another systemic look at the whole issue of rush hour congestion and inefficient use of highway resources.
Atlanta is certainly a prime candidate for a service like ours. The December 10th, 2011 issue of The Economist weekly magazine ran an article detailing an upcoming vote in Atlanta on whether to spend an additional $6 billion building new highways, ramps, overhangs, and bridges to reduce congestion on highways. Atlanta could certainly use the extra capacity: its average rush hour commute is a staggering 127 minutes.
But there is still the question of whether this is the best way to add capacity. Just to reiterate, the proposed expansion will cost almost $6 billion, and it will have a substantial but less than revolutionary impact: only 800,000 people will see their commute cut to 45 minutes or less, roughly half the time of the current commute.
So how much would it cost Rideshare to achieve the same degree of savings?
It’s a little hard to convert minutes of commute into number of drivers, because of the synergistic effects we discussed earlier. Each additional driver you add to the highway slows down EVERY driver on the highway, which means still more drivers get added as people are on the highway longer, which adds still MORE drivers, and so on. Modeling this effect and writing a formula for it is very difficult.
Still, let’s take a crack at it. Remember that for a passenger on Rideshare’s service, one of the biggest benefits of the service is TIME. The passenger can spend the entire trip to and from the office working, sleeping, talking with family, streaming Netflix, or any other activity they desire. They are literally paying for time. Since time is the metric the article uses, let’s take that as our reference point.
Let’s assume a 1-1 driver passenger ratio. Cutting commuting times in half for 800,000 people is mathematically equivalent to eliminating “commute times”(i.e., time spent driving) for 400,000 people. A passenger in Rideshare’s service has essentially had their “commute time” cut to zero, since with modern laptops and smartphones they can work just as efficiently in the passenger seat of a car as they can in the office.
800,000 people using Rideshare’s service translates to taking 400,000 cars off the road and creating 400,000 time-enriched passengers, assuming a 1-1 driver-passenger ratio. Let’s assume right now that the people of Atlanta are making the same average commute as people in other cities, roughly 20 miles each way. Rideshare’s $0.55 per mile charge x 400,000 pairs = $44,000 per day. 250 commute-days per year translates into a yearly cost of $11 million.
The average service life of a road is somewhere between 30 and 100 years, according to the Department of Transportation. The wide range is due to the fact that in the United States many decrepit roads are left in service long after reaching the end of their useful life spans, which imposes other costs on drivers such as higher vehicle repair costs. Whether through maintenance costs on roads or vehicle repair costs on unmaintained roads, drivers pay for the roads. But never mind. Let’s be extremely conservative and give credit for the full 100 years to the road, AND let’s even assume NO maintenance or vehicle repair costs for that whole period(unlikely). $6 billion divided by 100 years STILL equals $60 million a year in current costs. That’s almost SIX TIMES Rideshare’s costs to achieve the same reductions.
The actual number is of course even higher. There WILL be maintenance costs, and vehicle repair costs, and we haven’t even counted Rideshare’s pollution, climate change, gas savings, parking savings, or other benefits yet. Atlanta, like every other major city in America, is prime real estate for Rideshare.
Atlanta is certainly a prime candidate for a service like ours. The December 10th, 2011 issue of The Economist weekly magazine ran an article detailing an upcoming vote in Atlanta on whether to spend an additional $6 billion building new highways, ramps, overhangs, and bridges to reduce congestion on highways. Atlanta could certainly use the extra capacity: its average rush hour commute is a staggering 127 minutes.
But there is still the question of whether this is the best way to add capacity. Just to reiterate, the proposed expansion will cost almost $6 billion, and it will have a substantial but less than revolutionary impact: only 800,000 people will see their commute cut to 45 minutes or less, roughly half the time of the current commute.
So how much would it cost Rideshare to achieve the same degree of savings?
It’s a little hard to convert minutes of commute into number of drivers, because of the synergistic effects we discussed earlier. Each additional driver you add to the highway slows down EVERY driver on the highway, which means still more drivers get added as people are on the highway longer, which adds still MORE drivers, and so on. Modeling this effect and writing a formula for it is very difficult.
Still, let’s take a crack at it. Remember that for a passenger on Rideshare’s service, one of the biggest benefits of the service is TIME. The passenger can spend the entire trip to and from the office working, sleeping, talking with family, streaming Netflix, or any other activity they desire. They are literally paying for time. Since time is the metric the article uses, let’s take that as our reference point.
Let’s assume a 1-1 driver passenger ratio. Cutting commuting times in half for 800,000 people is mathematically equivalent to eliminating “commute times”(i.e., time spent driving) for 400,000 people. A passenger in Rideshare’s service has essentially had their “commute time” cut to zero, since with modern laptops and smartphones they can work just as efficiently in the passenger seat of a car as they can in the office.
800,000 people using Rideshare’s service translates to taking 400,000 cars off the road and creating 400,000 time-enriched passengers, assuming a 1-1 driver-passenger ratio. Let’s assume right now that the people of Atlanta are making the same average commute as people in other cities, roughly 20 miles each way. Rideshare’s $0.55 per mile charge x 400,000 pairs = $44,000 per day. 250 commute-days per year translates into a yearly cost of $11 million.
The average service life of a road is somewhere between 30 and 100 years, according to the Department of Transportation. The wide range is due to the fact that in the United States many decrepit roads are left in service long after reaching the end of their useful life spans, which imposes other costs on drivers such as higher vehicle repair costs. Whether through maintenance costs on roads or vehicle repair costs on unmaintained roads, drivers pay for the roads. But never mind. Let’s be extremely conservative and give credit for the full 100 years to the road, AND let’s even assume NO maintenance or vehicle repair costs for that whole period(unlikely). $6 billion divided by 100 years STILL equals $60 million a year in current costs. That’s almost SIX TIMES Rideshare’s costs to achieve the same reductions.
The actual number is of course even higher. There WILL be maintenance costs, and vehicle repair costs, and we haven’t even counted Rideshare’s pollution, climate change, gas savings, parking savings, or other benefits yet. Atlanta, like every other major city in America, is prime real estate for Rideshare.
Wednesday, April 4, 2012
Buses, Vans, and Cabs Oh My!
Okay, so I know I take my artistic license a little far sometimes. So to make up for it, today my topic is going to be the law, which is about as far from art as you can get.
Your service sounds like it could be a winner, but is what you do…..you know…..legal? Do you have a license?
That was actually my dad talking, not a potential Rideshare customer as he lives out of state. And no, we don’t exactly have a license. But we don’t exactly need one.
Most industries today are regulated in one form or another, and ours is no different. Indeed, since Rideshare is trying to bring together several previously separate industries(public transportation, carpooling), we have to be familiar with the regulations for each of them. Today we want to talk a little bit about how those regulations impact our business plan, and what we plan to do to stay on the right side of them.
The regulatory world we find ourselves in does limit our options somewhat. Specifically, the taxi licensing regulations. Although taxi regulation is a state and local matter, thus making it hard to make general statements that are true throughout the United States, a few general principles hold true throughout.
Point 2 is what makes our business viable. Point 1 is what might make our business harder to operate, and Point 3 is how we plan to avoid any regulatory troubles.
Because of the regulations governing taxi services, Rideshare does not and will never employ professional drivers who are paid to convey people from place to place. We are a peer-to-peer network that coordinate the activities of members who already intend to travel to a specified location. As such, we are NOT a taxi service, and do not require a license to operate our app. What we do is no different than what thousands of friends, family members, and coworkers do every day. Except that we bring all those small carpools together into one larger service, affording everyone more flexibility and reliability in their carpool.
Public transportation is not so much regulated as it is exclusive. By definition, only the government can provide “public” transportation. But, there is no law saying that other companies cannot provide alternative means of achieving the same ends as public transportation, as long as they don’t fraudulently claim to be a government agency, which of course we don’t. But just in case you somehow thought otherwise, here is an official disclaimer:
“Rideshare is not an official government agency. We are a private company providing a for-profit service in a socially responsible way."
Please remember that we are all stuck in traffic together. We all breathe the same polluted air from millions of vehicle emissions. If we use the fuel that drives us to be good, we can live socially and responsibly through collaborative consumption.
Your service sounds like it could be a winner, but is what you do…..you know…..legal? Do you have a license?
That was actually my dad talking, not a potential Rideshare customer as he lives out of state. And no, we don’t exactly have a license. But we don’t exactly need one.
Most industries today are regulated in one form or another, and ours is no different. Indeed, since Rideshare is trying to bring together several previously separate industries(public transportation, carpooling), we have to be familiar with the regulations for each of them. Today we want to talk a little bit about how those regulations impact our business plan, and what we plan to do to stay on the right side of them.
The regulatory world we find ourselves in does limit our options somewhat. Specifically, the taxi licensing regulations. Although taxi regulation is a state and local matter, thus making it hard to make general statements that are true throughout the United States, a few general principles hold true throughout.
- It is illegal to operate a taxi service, or the functional equivalent, without a state license.
- These licenses are far fewer in number than the market equilibrium would dictate, producing an acute shortage of point-to-point transportation services
- The difference between a carpool/vanpool service and a taxi service is generally defined as the difference between paying a driver to travel to a destination he otherwise would not visit, and one he was already planning to go to before he picked up his passenger.
Point 2 is what makes our business viable. Point 1 is what might make our business harder to operate, and Point 3 is how we plan to avoid any regulatory troubles.
Because of the regulations governing taxi services, Rideshare does not and will never employ professional drivers who are paid to convey people from place to place. We are a peer-to-peer network that coordinate the activities of members who already intend to travel to a specified location. As such, we are NOT a taxi service, and do not require a license to operate our app. What we do is no different than what thousands of friends, family members, and coworkers do every day. Except that we bring all those small carpools together into one larger service, affording everyone more flexibility and reliability in their carpool.
Public transportation is not so much regulated as it is exclusive. By definition, only the government can provide “public” transportation. But, there is no law saying that other companies cannot provide alternative means of achieving the same ends as public transportation, as long as they don’t fraudulently claim to be a government agency, which of course we don’t. But just in case you somehow thought otherwise, here is an official disclaimer:
“Rideshare is not an official government agency. We are a private company providing a for-profit service in a socially responsible way."
Please remember that we are all stuck in traffic together. We all breathe the same polluted air from millions of vehicle emissions. If we use the fuel that drives us to be good, we can live socially and responsibly through collaborative consumption.
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