Taxi Owner Copies Innovative Business Model Of Free Shuttles He Just Forced To Shut Down

from the regulatory-capture dept

Tue, Aug 25th 2009 2:40pm — Mike Masnick

Earlier this year, we wrote about how some of the taxi companies in Tampa, Florida were upset about free competition. Some smart business folks had setup local transportation options, that subsisted on advertising and tips, rather than fares, and thus were able to avoid having to buy a (sold out) taxi cab license. But, of course, the existing cabbies freaked out and complained, and convinced the city council to declare that the free cabs had to buy licenses as well... while conveniently noting that none are available. Basically, the cab drivers got the city council to drive this competition out of town.

But, now there's a bit of a twist. A bunch of folks have sent in the news that one of the guys who pushed the city council the hardest has now suddenly set up his own free shuttle offering in place of the competition that was run out of town. He makes no qualms about the fact that he's copying the idea of the shuttles he just knocked out of business, saying they had a good idea -- he just didn't like the fact that they didn't have to buy a taxi license. Neat trick, huh? Get the government to drive your competitors out of town, and then copy their best ideas.

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Filed Under: business models, competition, free, pay what you want, tampa, taxi

61 Comments

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william (profile), 25 Aug 2009 @ 2:09pm

speechless... simply amazing.

oh yeah, and shameless too.
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Anonymous Coward, 25 Aug 2009 @ 2:48pm

Sounds like...
Huh...sounds like someone complaining about patents, getting them eliminated, and then copying the inventions in them.
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Ryan, 25 Aug 2009 @ 2:55pm

And the 100 millionth example of how mandatory licenses and regulations are primarily tools for the government and incumbent businesses to slow innovation, stifle competition, and maintain control. People think they make them safer(the massive perpetuation of myths that "under-regulation" caused the housing bubble/toxic assets mess was sickening), but they don't.
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Ryan, 25 Aug 2009 @ 2:57pm

Re: Sounds like...
Hmm, interesting. Except...if you eliminate patents, the original creator is not prevented from continuing to offer his product. Would you really bitch if all the cab drivers in Miami started offering free cab service? Personally, that sounds like a valuable service to consumers...
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PrometheeFeu (profile), 25 Aug 2009 @ 3:04pm

Apparently, that is what business is these days: Don't try to compete, just use the government to ban your competitors. People who do that should be sued for the harm they do to the economy.
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senshikaze (profile), 25 Aug 2009 @ 3:21pm

you know...
I want to say that this is bad, but the dud set up a FREE service. It is very rare for a company to take a good idea that is free and try to make it work, even if his actions up to this point were selfish.
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Valkor, 25 Aug 2009 @ 3:22pm

"sold out" cab licenses
The issue here isn't business model protectionism, it's an artificially scarce good. This cab company that is using the different business model is simply taking advantage of the fact that he already has access to the "scarce" good of cab licenses.
Most of the companies are being protectionistic, the adaptive company is being opprotunistic, and the little guy is getting screwed by the city council.
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Leviathant (profile), 25 Aug 2009 @ 3:26pm

Talent borrows, genius steals.
It's not what you know, it's who you know.
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Anonymous Coward, 25 Aug 2009 @ 3:30pm

I actually predicted something like this.
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Anonymous Coward, 25 Aug 2009 @ 3:34pm

Re:
Very good, you're catching on. The business model of the future; lobby the government and sue.
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Alan Gerow (profile), 25 Aug 2009 @ 4:03pm

Just goes to show in the upteenth billionth example that government licensing and regulations are used to stifle competition for the already established companies. Government is little more than a tool for people who seek power and control over others.
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Anonymous Coward, 25 Aug 2009 @ 4:03pm

It comes back to the same thing every time:

If you have a business model where you don't have to conform to the rules, you don't have the expenses of existing services, and you aren't subject to any regulations, then yes, you can operate at a lower cost than the existing companies.

However, if the "green hop" units were subjected to normal taxi laws they would be out of business. Just like running a business that gives away someone elses IP without charge, this is just trying to operate without paying attention to the rules.

I suspect if the Tampa council worked out it, they could come up with regulations for this type of service, but the costs of being "legal" would likely run them all out of business in the end. I would also say that the council would still be forced to issue permits and limit the numbers just to keep the situation from getting out of hand, and so they could assure that the services are safe, secure, properly insured, and that the drivers have the appropriate permits to be transporting "paying" passengers.

In the end, the existing taxi services are probably in the best position to offer this sort of service, where they can also make sure that they aren't competing against themselves for no reason.
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Anonymous Coward, 25 Aug 2009 @ 4:04pm

IT's
Actually all good as long as I'm the one getting rich.. Cut out my cheddar and we gots some pr0blems..
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Harry, 25 Aug 2009 @ 4:10pm

Re: Sounds like...
Except, it is the exact opposite of getting rid of patents...
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Alan Gerow (profile), 25 Aug 2009 @ 4:11pm

Re: you know...
Yeah, that first guy who had the idea and started doing it then had his life ruined when the government stepped in to enforce arbitrary licensing requirements ... that's not a big deal at all, screw him, everyone else is still getting free cab rides. o_O

The people get free cabs in the end, which is good, but the government ruining more lives, not so good.
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Mechwarrior, 25 Aug 2009 @ 4:12pm

Re: Sounds like...
What patents are you talking about? Oh right, you're not saying anything substantiated.
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Alan Gerow (profile), 25 Aug 2009 @ 4:21pm

Re:
Except the licensing and regulations aren't instituted for safety reasons. They're usually backed by companies in that industry for the primary reason to raise the cost of entry for competitors.

Licensing & regulations do nothing for safety, because keeping your customers safe & happy to return does more for companies than government regulations. Licensing & regulations are mainly used by companies to prevent new players from entering the market and essentially freeze an industry from disruptive players.

In the end, this means less innovation, less invention, less progress, and higher costs to consumers. Licensing & regulations hinder progress at the expense of padding the pockets of those who were in business before the licensing & regulations were enforced on an industry.

There's no reason a cab needs a special license other than for the already established cab companies to prevent new competition and keep prices artificially inflated. This example proves that:

A new player attempted to disrupt an existing market. The existing players leveraged licensing laws to force the new company out of business. Now, one of the existing companies took the disruptive business model after it was shown to be plausible, but it took someone trying that WASN'T one of the established players to even try. Free cab rides could have been done it years ago, and if this person didn't try and ultimately had his life ruined by the government, then the market never would have evolved on its own. It was stagnant. If that guy played by the rules, there would be no free cab rides for anyone ever.
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Bubba Gump (profile), 25 Aug 2009 @ 4:25pm

Atlas Shrugged
Amazing how so much of what is happening now was covered in Ayn Rand's novel, Atlas Shrugged.
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bugmenot (profile), 25 Aug 2009 @ 4:32pm

+1 to Ryan's comment @ #3
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Anonymous Coward, 25 Aug 2009 @ 4:38pm

Re: Re: Sounds like...
Not quite. The first guy "invented" the free service. The second guy legally eliminated the first guy, and then "stole" his invention, which was also perfectly legal since the first guy had no protection for his implementation. Now, extrapolate to patents...
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Anonymous Coward, 25 Aug 2009 @ 4:55pm

Re:
The taxi cab lobbies who were lobbying against the competition do not care about safety and order, they were not lobbying that the competition be outlawed because they care about what's best for society, they were doing it because they care about their own profit margins. It has nothing to do with safety and order or anything like that and it has everything to do with politics.
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Anonymous Coward, 25 Aug 2009 @ 4:57pm

Re: Re:
It's usually the poor that innovate and the rich that steal the innovations of the poor, ban the poor from using it (ie: with government regulations like patents), and use it for themselves. It's very sad.
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Anonymous Coward, 25 Aug 2009 @ 5:03pm

Re: Re: Re: Sounds like...
Patents should protect the first guy but they hardly ever protect the innovators. Instead, the law usually protects the status quo be it by patents or otherwise.

Another example of this is e - cigarettes.

http://forums.christianity.com/FDA_unapproved_drug_or_Cigarette_Tax_Revenue%3f/m_4299 768/mpage_1/tm.htm#1

The innovator of the product ends up getting his product banned by various FDA's and the U.S. allows a local company that did not come up with the invention to make it while banning the competition that invented it under health and safety pretexts but that's all just lies.

Patents have done almost nothing for innovators, they hardly ever do. They're used by rich and powerful corporations to exploit people.
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PrometheeFeu (profile), 25 Aug 2009 @ 5:07pm

Re: you know...
Except for the fact that there used to be a lot more of that free service provided.
This story is sickening. Most protectionism we hear about here is about inventors, creators and innovators trying to prevent others from using their ideas. Now, I'm opposed to IP, but at least I can understand the human desire to benefit from what you worked at. It can be tough to invent something and not make anything off it because you didn't have a good business model to go along. But here, this is just plain theft. What's the difference between theft and IP infringement? When someone infringes your IP, you still get to keep the ideas and use them. Here, someone invented something good and useful, and someone else, came along, and took it away from them. This is a morality tale. The asshole always wins.
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Anonymous Coward, 25 Aug 2009 @ 5:11pm

Re: Re: you know...
Good guys finish last (if at all) right?
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ChurchHatesTucker (profile), 25 Aug 2009 @ 5:12pm

Re: Re: Re: Sounds like...
"The first guy "invented" the free service. The second guy legally eliminated the first guy, "

Child, patents are the "legally eliminating" part of that equation. They're the taxi medallions. Get it?
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Anonymous Poster, 25 Aug 2009 @ 5:15pm

Why am I not surprised? I hope the city council gets wind of this and bites this guy on the ass.

Oh who am I kidding, they'll give the guy a medal.
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Anonymous Coward, 25 Aug 2009 @ 5:16pm

Re: Sounds like...
you meant micro$oft
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Anonymous Coward, 25 Aug 2009 @ 5:16pm

Re: Re: you know...
and this is exactly my point. My point is that the rich and the powerful are often rich and powerful not because they are somehow smarter and more innovative than the rest of the population, it's not because they are somehow more hard working than the rest of the population, but it's often because they are more willing to act unethically than the rest of the population. On an individual scale ethics is an obstacle to prosperity, it artificially limits your actions making it more difficult for you to succeed and puts artificial limits on how much one can succeed. But there is nothing wrong with that because if everyone is unethical then as a society we are worse off than if everyone acts ethically. But the problem is that if some people are unethical and most people act ethically the people who are unethical are better off and they get rich and powerful at everyone elses expense. The difference between being rich and being poor is often that the rich simply have lower ethical standards than the poor so they are less restricted in terms of what they can do to acquire wealth.
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Headbhang (profile), 25 Aug 2009 @ 5:33pm

Re: Re: Re: you know...
It's part of it, sure, but not the whole issue.

A great deal of it is the fact that, the way things work, money calls money. As long as you don't get stupid, the more money you have, the easier you can make more money. Heck, given enough money, you can live a decent life merely off the interest.
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Anonymous Coward, 25 Aug 2009 @ 5:39pm

There's a special place in hell reserved for this guy.
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..., 25 Aug 2009 @ 6:12pm

Re: Sounds like...
logic fail
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NullOp, 25 Aug 2009 @ 7:18pm

More of the same...
Its really always been that way. When possible, get the govt to run your competitor out of business while you make a killing. After all, you don't really think the post office is owned by the U.S. govt do you?
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Anonymous Coward, 25 Aug 2009 @ 7:34pm

Sounds like an Obama tactic.
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Anonymous Coward, 25 Aug 2009 @ 9:09pm

Re:
I highly doubt Obama is even aware of this. That probably one of the problems with this nation, our elected officials are for the most part clueless about what goes on.
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Another Coward, 26 Aug 2009 @ 12:08am

Coping the Business Model
Isn't that the M$ way.
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Enrico Suarve, 26 Aug 2009 @ 1:56am

Re: Re:
"Licensing & regulations do nothing for safety, because keeping your customers safe & happy to return does more for companies than government regulations"

Exactly how much repeat business do you think the average stand based driver relies on? If he takes your money and kicks you out in the middle of nowhere what are you going to do?

It's a good job that this site and many others aren't full of truly awful examples of various companies attitude to customers and their safety otherwise your comment would be laughable...

Bring back the zinc in my toothpaste I say...
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Ronald J Riley (profile), 26 Aug 2009 @ 5:06am

Morally Reprehensible
"He makes no qualms about the fact that he's copying the idea of the shuttles he just knocked out of business, saying they had a good idea -- he just didn't like the fact that they didn't have to buy a taxi license. Neat trick, huh? Get the government to drive your competitors out of town, and then copy their best ideas."

This is the essence of the fight between inventors and what Mike likes to call innovators. Of coarse, the word innovator is being misused and the meaning twisted.

This kind of dirty dealing is not acceptable. It does not matter if it is done in transportation or the invention business. It is still morally reprehensible.

Ronald J. Riley,

I am speaking only on my own behalf.
Affiliations:
President - www.PIAUSA.org - RJR act PIAUSA.org
Executive Director - www.InventorEd.org - RJR at InvEd.org
Senior Fellow - www.PatentPolicy.org
President - Alliance for American Innovation
Caretaker of Intellectual Property Creators on behalf of deceased founder Paul Heckel
Washington, DC
Direct (810) 597-0194 / (202) 318-1595 - 9 am to 8 pm EST.
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Killer_Tofu (profile), 26 Aug 2009 @ 6:13am

Re:
AC you are one of the biggest idiots to frequent here. The only other person to keep arguing such baseless arguments was weird harold. Even angry dude makes more sense than you.

However, if the "green hop" units were subjected to normal taxi laws they would be out of business
The ONLY rule they weren't following was the stupid city issued license. Other than that they were a taxi, and making a profit.
In short, you're an idiot and can't understand anything. You argue just to argue against anything Mike says, no matter what it is. AKA Troll.
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Overcast (profile), 26 Aug 2009 @ 7:01am

Re: Re: Re: Sounds like...
Not quite. The first guy "invented" the free service. The second guy legally eliminated the first guy, and then "stole" his invention, which was also perfectly legal since the first guy had no protection for his implementation. Now, extrapolate to patents...

Well - for one, the battle may not be over - and two - patent or no, I would never use this copycat 'free' service just on principle after knowing this. Patents aren't everything - but to business 'reputation' is.
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Shane, 26 Aug 2009 @ 8:05am

Free Market...Of Course
A story like this is the exact reason you just can't trust the "free market" for profit folks that will appeal to many aspirational people with the idea of getting the rules out of the way so they can do business. But at the same time these are the same folks that need rules to be created in their favor to protect their out of touch ideas. If you want to compete then compete and stop this stupid astroturfing to make the public thing you are just a working man, while you screw your competition...not with good ideas but ones that stall the entire economy/culture.
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Sigh, 26 Aug 2009 @ 8:14am

What an obamanation
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Anonymous Coward, 26 Aug 2009 @ 8:25am

A special place in hell
It's a taxi rank
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CastorTroy-Libertarian, 26 Aug 2009 @ 8:45am

Re:
Wow do you need the government to get you a blanky too...
FFS a guy innovated, got successful, so of course you need to regulate it, i mean we can have "little" guys getting uppity and thinking for themselves...the city council and the taxi guys should be pounded into the sand for doing this, what do you need to regulate on a taxi, charge too much? out of business, charge to little, out of busines, unsafe? people get hurt because of YOUR choice to be unsafe and guess what your out of business THE MARKET AND THE PEOPLE WILL DECIDE..

regulation breeds oppressive restrictions to freedom and created this "entitlement" craze... People have to be responsible, they have to choose, not have the choice made for them...
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nasch (profile), 26 Aug 2009 @ 8:48am

Re: Free Market...Of Course
A story like this is the exact reason you just can't trust the "free market" for profit folks that will appeal to many aspirational people with the idea of getting the rules out of the way so they can do business.

If the free market had been allowed to operate, and the rules gotten out of the way, this never could have happened.
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dorp, 26 Aug 2009 @ 9:14am

Re: Morally Reprehensible
Ronald,

Next time you comment with your shilling and obnoxious signature, how about you read the article?

Here is a list of your failures:

1. You provided no explanation for what you understand as "innovation." Mike uses well defined description. You use none.

2. You do not explain this "nature" of the fight.

3. You are failing to see that an artificial monopoly is what is being used here to get rid of competition. Yet, you imply that some other type of artificial monopoly would solve this problem.

4. Your empty attacks are also reprehensible, may be we should limit your right to printing 362 characters a day as part of your right to "invent." That's the length of your ridiculous signature, by the way.
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peterK, 26 Aug 2009 @ 9:47am

Forgot last step...
pay city officials for their hard work
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Anonymous Coward, 26 Aug 2009 @ 11:41am

Re: Free Market...Of Course
A story like this is the exact reason you just can't trust the "free market"

This is exactly opposite of the free market! A free market wouldn't have the arbitrary limit on the number of licenses available. This is simply ugly rent-seeking, where the existing taxi-drivers use the limited licenses to avoid any competition to their businesses.
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Derek Kerton (profile), 26 Aug 2009 @ 11:58am

Re: Re: Re: Sounds like...
Sorry. Comprehension Fail on your part. If you want to extrapolate to patents:

The first bunch of drivers "invented" taxi service in Tampa, got medallions for their cars. Now they are the ONLY ones that are allowed to perform livery service in Tampa, because they have these medallions. These are the equivalent of patents, because they exclude any subequent innovators from the market...as they did in this case.

The taxi cabal then simply abuse the monopoly power they have, reduce supply, and use the government to squash their competition. They also adopted some of the best practices of the innovator.

You're saying, "If only there had been some kind of protection for the innovator, things would be better." But make no mistake, there WAS patent-like protection in this story. The original 'innovator' was the Taxi cabal. And a gov't-granted artificial monopoly allowed them to screw the new innovator.
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Derek Kerton (profile), 26 Aug 2009 @ 12:03pm

Re: Oversimplification!
You don't think banking needs a little more regulation than the taxi market?

Banks can "create money" through multipliers and loaning it out. When they fail, they have confidence repercussions that ripple through the economy. Regulations are required to limit the amount of money they can lend out, based on the assets they hold to assure us that they remain solvent. Especially since the risk of failure is (so clearly) socialized.

An economy, and the value of a dollar, is a church of faith. FIAT money needs regulations to maintain that faith. Taxi service in a city, less so.

Disagreeing with you is starting to feel like a habit.
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Anonymous Coward, 26 Aug 2009 @ 1:12pm

It's a government taxi on innovation.
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Derek Kerton (profile), 26 Aug 2009 @ 1:20pm

Re: Re: Morally Reprehensible
Maybe if we all get some kind of gov't sanctioned artificial monopoly, then we'll each make more money, and society will be better off. If we lock everything up, then there will be more of everything later on, right? The feds should start allocating these monopolies to each citizen ASAP.

Signed, the capitalist free-marketers from opposite world.
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Anonymous Coward, 26 Aug 2009 @ 1:23pm

Re: Re: Oversimplification!
It has nothing to do with safety, taxi cab drives already have drivers licenses just like everyone else. We know the laws of the road and what we can and can't do to keep everything working smoothly and safely. I can pick up a friend with my car and that's fine because I have a drivers license. What's the difference between if I pick up someone or someone else does it. If anything it encourages carpooling. Otherwise it should be illegal for anyone to pick anyone else up.
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Derek Kerton (profile), 26 Aug 2009 @ 1:27pm

Re: Re: Free Market...Of Course
That's Shane's point. Most self-anointed free-market champions are, in fact, not pro free market.

They are generally existing players who don't want the rules changed. They like the rules that hold them in a good position, but reject any change in rules, any new rules that would bring change, and innovation in general. They think along these lines: "Any rules that existed when I entered the biz are 'god given' and are just the way things should be. Any rules that come after are anti-free market, socialist, and/or fascist."
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Anonymous Coward, 26 Aug 2009 @ 1:34pm

Such bullshit. I hope this asshat gets hit by a fucking truck.
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Derek Kerton (profile), 26 Aug 2009 @ 1:38pm

Re: Re: Free Market...Of Course
That's Shane's point. What most call the "free market" seldom is.

Telcos, for instance, often talk about supporting the free market, and back such initiatives as "Hands Off The Internet". Yet they fail to mention...or maybe even to notice...that their companies were built on free land, government subsidies, local monopolies (franchise rights), Universal service subsidies, and any number of other NON free market mechanisms.

Most self-anointed free-market champions are, in fact, not pro free market. These players conflate "free market" with "status quo", and often end up arguing points that are actually in opposition to free markets. Patent supporters in this site's comments sometimes make this mistake.
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Derek Kerton (profile), 26 Aug 2009 @ 1:42pm

Re: In tech terms
A hack is causing a Denial of Service on his competitor.

(suck on those double meanings)
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Derek Kerton (profile), 26 Aug 2009 @ 1:44pm

Re: Re: Re: Oversimplification!
did you reply into the wrong thread? seems like you are addressing someone else.
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Anonymous Coward, 26 Aug 2009 @ 1:56pm

"Huh...sounds like someone complaining about patents, getting them eliminated, and then copying the inventions in them."

I think you meant to say ...

"Huh...sounds like someone patenting an "idea", not setting up a business, waiting until someone else takes the initiative and risk of starting up the company to produce whatever the idea is about (product, apparatus etc) and then the first person taking the second person to court to shut them down once their company is going really well and then setting up their own business now that they know the idea is good and wanted in the market."
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Griff (profile), 2 Sep 2009 @ 1:33am

Taxi licenses are a good thing
When a city has too many cabs, none of them can make a decent living.
When the only cabs are the fixed number of licensed cabs, the authorities can afford to ensure they are all safe.

The problem is often the process by which they are acquired, and how the city decides how many.
(guideline - if licenses change hands for > 10 years wages they are probably too few)

If a license was reviewed every few years and could be taken away for non use or abuse, it might be better. Taxi license holders do seem to have undue power. In Cambridge they managed to block a perfectly good city centre tourist sightseeing cycle rickshaw business, forcing them to have CRB checks taking 6 weeks for their riders (casual seasonal labour who can't wait that long to land the summer gig) and requiring them to have "the knowledge" of every street in the entire city although they rarely left the historic centre. When the railway station was redeveloped with a new taxi rank and tried to charge cabs a fee for using the rank the cabbies forced a climbdown.

But if you accept the existence of a license system, it should be a license for carrying passengers for commercial benefit and should make no distinction between free and charging business models. It was therefore irrational that the original free shuttles should not require a license.

Anyway, this guy running the free licensed cab is probaly v busy while he is the only one offering it. If they all try it they won't all be busy for long.
Sounds to me like he's a shrewd guy.
If he has proved free works even with the cost of a license factored in, then the original shuttles should have tried to buy someone's license.
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Bryan, 23 May 2010 @ 7:47pm

TAMPA’s ELECTRIC CARS
You may want to mark your calendar for 9am on June 9 – the next Public Transportation Commission meeting. We just found out that Yellow Cab won their lawsuit, which determined that advertising and tips can be considered as compensation.

We are not sure what is going to happen next, but wanted to give you a heads up. Please keep in touch so we are all on the same page. We’ll do the same.

Here’s an article about golf carts on Davis Islands: http://southtampa2.tbo.com/content/2010/may/21/davis-islands-residents-seek-ok-alternate-transpor/

This may confuse the issue a bit.
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