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New ride-sharing applications can benefit everyone, says the MEI

Montreal, Friday, November 21, 2014 – The advent of ride-sharing applications has provoked a small revolution in the taxi industry over the past few months. To meet the challenge of new players, Montreal company Taxi Diamond announced a $1-million modernization plan last week. Do these new technologies represent a risk for the industry, or an opportunity for it to reinvent itself? Could their wide-scale adoption be economically beneficial for everyone?

In a Viewpoint published today, the MEI provides an overview of the benefits of ride-sharing applications. In addition to reduced costs and waiting times for users, these apps allow for a more efficient use of urban transportation resources, a reduction in kilometres travelled, as well as smaller and fewer traffic jams and less pollution.

A survey carried out in 21 large U.S. cities shows that for a standard ride, using Uber is cheaper than using a taxi everywhere except in New York and Philadelphia. Moreover, in San Francisco, 93% of customers who used ride-sharing apps waited 10 minutes or less for their rides to arrive after placing their calls, compared to just 35% of customers who used traditional taxi services.

“More drivers offering rides will necessarily lead to an increase in the number of people seeking rides. Everyone could come out ahead, taxi drivers included,” explains Vincent Geloso, coauthor of the study and Associate Researcher with the MEI.

The publication also suggests that taxi drivers should be compensated partly for the falling value of their permits in the event that the use of ride-sharing applications becomes widespread.

“Thanks to the arrival of these apps, a veritable transformation of the taxi industry is taking place. The measures adopted by governments should take into account the benefits produced by these innovative companies, without neglecting the legitimate concerns of permit holders,” concludes Jasmin Guénette, coauthor of the publication and Vice President of the MEI.

The Viewpoint entitled “Ride-Sharing Applications and the Future of Urban Transportation” was prepared by Vincent Geloso, Associate Researcher at the Montreal Economic Institute, and Jasmin Guénette, Vice President of the MEI. This publication is available on our website.

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The Montreal Economic Institute is an independent, non-partisan, not-for-profit research and educational organization. Through its studies and its conferences, the MEI stimulates debate on public policies in Quebec and across Canada by proposing wealth-creating reforms based on market mechanisms.

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Interview requests: Mariam Diaby, Communications Director, Montreal Economic Institute / Tel.: 514-273-0969 ext. 2231 / Cell.: 514-668-3063 / Email: mdiaby@iedm.org

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