The Taxi Service in Italy: Motivation and Outline of the Recent Reform

Abstract

This paper presents a quantitative and analytical documentation to the debate on taxi service liberalization. The results of a survey of the Bank of Italy on the main Italian cities show that the supply of taxi is much lower than that of other foreign cities. The paper gives also some quantitative and qualitative evidence of the negative effects on consumers and on the creation of rents deriving from the present taxi regulation. The economic analysis and the positive results of the recent experiences of liberalization in other countries show that a rigid regulation on tariffs and supply, like the one adopted in Italy, lacks a solid analytical as well an empirical basis for support. Likely, the lower availability of taxi in Italy does not reflect only quantity and price regulation but also other characteristics of the regulation itself, such as the prohibition of juridical persons to operate on the market and a decentralized decision process that attributes more consideration to the interests of taxi drivers with respect to those of consumers. The paper also presents some proposal, in the light of the effects of the recent Bersani decree, for a reform of the sector.