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Movability publishes interviews with mobility leaders, op-eds and serves as mobility experts for media outlets in Europe. Take a look at some of our work below.
The Taxi Tragedy: Why Taxi Regulations Often Fail
Roger Dørum Pettersen is a legend. He vas involved in starting up what became Norway’s second biggest taxi central, Norges Taxi. He also tried to start a ride-hail app company in 2012 in Norway, and was denied this by the government. He sued the government and complained to EFTA, EUs competition watch dog, and won. This complaint effectively opened the door to Uber and Bolt, who then have Roger to thank for being in the market.
Roger explains a lot of the key drivers in the taxi market, and delivers a ruthless critique calling it highly dysfunctional. “Everyone wants immediate profits, no one invests in the future,” he says. Let’s dive into our interview.
Recent article from Movability:
Lars (L): Roger, you describe the taxi industry as a “tragedy of the commons.” What do you mean?
Roger Dørum (RD): The tragedy of the commons is a situation in which a resource, available for use by everyone, is overexploited because each individual, acting according to self-interest, has an incentive to use as much of it as possible. Picture an apple tree forest where everyone rushes to pick the apples right away, and no one bothers watering, pruning, or ensuring the trees stand strong for next season. That’s exactly how it’s been in the taxi market for years. Everyone wants to make as much money as possible right now, but nobody thinks long-term about how the industry can grow or attract more customers.
L: Can you give an example of how overcharging of customers happens?
RD: Sure. Customers don’t understand taxi pricing. Many taxi owners therefore set a sky-high fare to make up for long idle periods. We end up with many charging high prices, and fewer and fewer passengers. The result is many drivers sitting around in cafés for hours without customers, and then when someone finally gets in the cab, they’re overcharged to cover the rest of the workday. The result is that the customer says “I’m never going to take a taxi again”, or is just generally less likely to use a taxi since they risk being overcharged.
L: Don’t politicians have a responsibility to ensure this doesn’t happen, to limit the “apple picking,” so to speak?
RD: Yes, but many politicians have limited understanding of the taxi market and are afraid of losing the votes of taxi license holders, so they tend to favor anything that protects existing players. The customers’ perspective gets lost in the shuffle. Then they end up not doing what’s best for the market. No one votes for a political party because of their “cool taxi policy,” but taxi owners do vote for whoever promises them minimal competition.
L: Downtime, license fees, and new players like Uber and Bolt. How do these fit into the picture?
RD: First: Downtime is huge. Drivers sit idle 70-80% of the time, so they jack up fares during the 20-30% of trips they actually get. Second: License rentals are extremely expensive. So-called “taxi barons” can own dozens of licenses and rent them out for a hefty sum. This ultimately hits the passengers’ wallets. Potential newcomers like Uber or Bolt could boost competition, but they’ve had to battle regulations and an industry that tries to shut them out.
L: You talk about a “tragedy of the commons,” where the industry undermines itself over time. Why doesn’t anyone take responsibility to fix this?
RD: Because nobody “owns” the collective interest. The authorities designed a system where every taxi owner operates independently and keeps all the revenue. Drivers work for owners on commission and are incentivized to try to get as much as they can per customer. There’s no real incentive to build a better, more affordable, more integrated service. It’s basically “every man for himself.” Everyone is just trying to survive, and the result is that the industry is almost digging its own grave while customers defect to buses and trains.
Other articles from Movability:
L: Do you have suggestions for a solution that avoids this “every one picking apples” problem?
RD: Either we need a truly free competition, no artificial barriers, or we need a strictly regulated system with clear rules, more like public transport. Right now, we have a half-baked mix: free pricing combined with restricted license access, which leads to corruption worries and sky-high fares. We need to move away from a situation where nobody wants to “water and tend the apple trees.” That might mean incentives for innovative, competitive setups, or stricter price regulation so people can actually afford to take a taxi.
L: If you could decide tomorrow, what would you change first?
RD: I’d get rid of pointless extra requirements, like expensive taximeters when everything is already tracked digitally, and introduce genuinely objective license rules: if you meet the criteria, you get a license, period. Then we need some way to drive down prices, maybe a cap or a stricter pricing model, until the market is ready for real competition. That would stop each taxi owner from “chopping down the apple trees” just to ensure their own survival.
Conclusion
According to Roger Dørum, the “tragedy of the commons” in the taxi market arises because taxi owners only focus on immediate gain, while the long-term viability of the service and future customer recruitment keep declining. Whether we move to genuine market freedom or tight regulation, one thing is certain: in today’s setup, expensive licenses, backroom deals, and soaring fares, both the industry and its customers end up losing.
