The Daily Parker

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Economics 101; or, why taxi fares are regulated

Yesterday, a man reportedly threw himself in front of a CTA train at the Fullerton El stop, shutting down the three busiest lines in the system during the morning rush hour. Commuters faced hours-long delays and an already at-capacity bus system struggled to adapt to the demand.

So did Lyft and Uber, as people found out. Lyft presented one of my friends with a $75 fare to go six kilometers; she wound up taking a bus and suffering through a two-hour commute. (I wasn't affected because I had the option of walking to work yesterday.)

Chicago's City Hall is outraged:

"It is unfortunate that at least two ride share companies chose to take advantage of this morning’s difficult commuter situation," said Lilia Charcon, a spokeswoman for the Department of Business Affairs and Consumer Protection spokeswoman.

But that's their business model. If demand goes up faster than supply, prices rise.

Graph: Ray Bromley.

The only way to stop that from happening is through regulation. Like the way we regulate taxis. But then there is no way to get a taxi when demand goes up like it did yesterday, because they're all in use.

Welcome to economics.

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