Algorithms and efficiency: price-fixing in digital Transportation Networks

Abstract

Urban transportation has been one of the economic sectors that has been impacted the most by mobile apps. These have reduced entry and transaction costs of such magnitude that markets have flourished. However, and as is often the case, regulation has not evolved as rapidly. These digital platforms create a challenge to regulation, and has impacted our notion of free competition. Thus, it is important to understand the economic consequences –negative and positive- that this technologies create in order to better grasp their business model, price formation and transaction processes, and, ultimately, avoid regulating them inappropriately via regulatory boxes that no longer fit reality.