Ok, so the government is making it compulsory for taxi drivers to put cameras in there cars right? They are doing this because some taxi drivers have been tragically injured – so its a safety issue.
But if its in the driver’s interest to have the camera, and they are the only ones getting a benefit from it, then surely they would only do it if the benefit of putting in the camera exceeded the cost. In which case, regulating for them to put cameras in is either pointless, or forces taxi drivers to do something where the cost exceeds the benefit – and so is suboptimal.
What am I missing? I must be missing something here, so just point it out to me and I’ll be happy 
20 comments
35 pings
Eric Crampton says:
March 31, 2010 at 10:42 am (UTC 12 )
http://offsettingbehaviour.blogspot.com/2010/02/regulation-seeking-behaviour.html
Matt Nolan says:
March 31, 2010 at 10:48 am (UTC 12 )
@Eric Crampton
Good article. That tells us why the established taxi organisations may want it.
But is there any way to show that this policy will be socially optimal? Or do we have to assume that this is on the basis of lobbying.
Could we set this up as either:
1) Some sort of co-ordination game where we have got stuck in the wrong equilibrium,
2) A game where cameras provide “safety” like a public good, and we face taxi drivers who are free riders.
Eric Crampton says:
March 31, 2010 at 12:23 pm (UTC 12 )
I can’t see any decent argument for it being socially optimal.
The benefits of having the camera are massively internalized by the drivers. So while there’s social benefit to a cabbie’s murderer being caught, the taxi driver facing the risk has pretty good incentive to make the right choice. You’d have to be right at the cutpoint where the risk of death and cost of camera leave the driver almost indifferent between the two for the public good effects to switch the optimal decision. Or, you could try telling the story that murderers will just be less likely to ride in cabs figuring that there’ll be cameras, but it ain’t exactly hard to look and see whether or not there’s a camera: the cabbies I’m sure would have them rather prominently displayed on the “What’s the point of a doomsday device if you’re not going to tell anybody about it?!?” theory. Only out would be if jitney drivers start displaying fake cameras that are cheaper to run than real ones, but given the lowish cost of cameras, I can’t buy this as serious worry.
I can’t much see the coordination story either. Best I can imagine is something on costs of camera installs going down a lot with bulk purchase, but the big companies ought to be able to do that anyway.
Lobbying is the best explanation. Maybe it’s the “knock out the competition” variety; maybe it’s a coalition of more risk-averse established cab company drivers with cameras worried about being undercut by jitneys run by risk-preferring drivers without cameras. Maybe it’s a misunderstanding of regulatory incidence by drivers for bigger companies who don’t have cameras and whose companies, perhaps, tell them to put in their own camera if they want one. I’d lean to the former given the still relatively low incidence of jitneys and the relatively low cost of cameras for large operators able to spread the fixed cost over many rides.
ben says:
March 31, 2010 at 12:34 pm (UTC 12 )
The raising rivals’ costs story is spot on. Joyce is allegedly a smart guy and been around the block in business – he must know of this explanation of taxi federation’s behaviour. And even if he doesn’t, the reasoning expressed in Matt’s post – let cameras be installed where and only where benefits exceed costs – is perfectly obvious.
So why isn’t Joyce doing the right thing here? I wish I could offer a more insightful explanation other than his own narrow self interest. Somebody died, the press picked it up, and the minister wants to look good and Do Something. The costs are relatively hidden and produces tangible results (a camera in every cab), however effective. Joyce is a bit more likely to keep his job. Is nobody in Cabinet going to stand up and say bollocks?
Eric Crampton says:
March 31, 2010 at 12:47 pm (UTC 12 )
The biggest cost isn’t the cameras; it’s the jitneys that will fail to come into the market when the world cup spikes demand (and the folks who consequently pay more / can’t get a cab).
My best guess: the taxi federation wants to earn those scarcity rents in a year’s time and are being proactive about it.
Robbie says:
March 31, 2010 at 1:26 pm (UTC 12 )
Is it possible that this is an instance where the Government is being purely paternalistic? They think that cameras are in the best interests of cab drivers who for whatever reason can’t do the maths and purchase themselves cameras.
One explanation for that could be simply a social information cascade… if noone has one that noone is likely to buy one because they’re “obviously” of no benefit.
I ask this with specific reference to the cirucmstances of this policy, notwithstanding the standard generalised argument that in any circumstance a person should probably know what’s better for themselves et cetera.
Eric Crampton says:
March 31, 2010 at 2:02 pm (UTC 12 )
Possible the govt believes this. But surely drivers chatting with each other about problem fares have more information about the likely benefits of cameras than does the government, who’ll only have data on the ones that result in police complaints.
I could buy it if taxi drivers mistakenly believed that cameras would never lead to prosecutions and government couldn’t credibly signal that camera evidence would be used. Don’t think we’re in that world though.
Matt Nolan says:
March 31, 2010 at 2:08 pm (UTC 12 )
@Eric Crampton
In my opinion, they are just trying to get public support for cameras, so they can catch hilarious footage and sell it – either as porn or too “New Zealand’s funniest home videos”.
It all makes sense now.
goonix says:
March 31, 2010 at 2:10 pm (UTC 12 )
@Matt Nolan
If there is a positive externality from pleasure and/or laughter surely the government should then be subsidising this activity?
Matt Nolan says:
March 31, 2010 at 2:24 pm (UTC 12 )
@goonix
There is a market price for it – so no externality per see
Just hope I don’t end up on it tbh
MikeE says:
March 31, 2010 at 2:59 pm (UTC 12 )
They want it to price the small operators out of the market. Big companies can afford it, smaller ones can’t so for bigger operators its nice anticompetiative behavior that increases market share..
edit: just noticed eric crampton said the same thing.
barrie567 says:
April 1, 2010 at 9:55 am (UTC 12 )
Congratulations MikeE I could not have said it better myself. Bigger companies trying to make it difficult for the smaller ones to survive. The thing that surprises us all in the industry is that Joyce has bought into it. It great to see that this issue is being debated outside the industry as well. I bet the taxi Federation would not have expected so much on-line blogging from many who do not know how the industry is run.Hopefully some of Joyce’s mates in the cabinet can see through what would have to be the most stupid of decisions made by this government yet.
craig says:
April 1, 2010 at 10:32 am (UTC 12 )
@Eric Crampton
I suspect you are correct, why the hell is this national govt buying into it?
has no one told them that there are over 7 thousand cabs in nz and only one third of them are members of the nz taxi federation.
taxi federation has been hounding govts for the last 20 years since degregulation about tougher standards to keep fly by nighters (or as they are known “dodgies”) out.
but none of it has worked as the smaller taxi companies have just lifted their standards higher to comply.
federation wants all cabs to be members of their club, will Joyce legislate that as well….? he may as well…gotta have cameras…gotta join big boys club…..!!!!
.
i think joyce better have a re-think over this compulsory cameras thing and please someone tell him the market was deregulated in 1989.
CG Duff says:
April 5, 2010 at 8:15 pm (UTC 12 )
Dear Sir, re TAXI CAMERAS.
Apparently the Taxi Federation and you are determined to have Cameras operational in all
Taxis by the end of the year . (ONE News/NZPA 31.3.2010) At night time and in the big
cities of Christchurch and in Auckland two taxi drivers have been killed by their
passengers.
Something has to be done.
However I question your broad universal response. I certainly do not need a taxi in my cab
as I do not work at night. Almost all my fares are picked up at Wellington Airport they have
flown in and would not be involved in violent criminal actions.
A camera in my cab would be an expensive, inappropriate, accessory.
As Mr Reddish from the Taxi Federation appears to accept that most cameras will be
mounted inside taxis there is hope that common sense may prevail and all taxis will not be
required to install cameras.
Nanny state will be checked by restricting the taxi camera requirement to night in the big
cities.
C G Duff
KIWI Cabs
Wellington.
Matt Nolan says:
April 5, 2010 at 8:22 pm (UTC 12 )
@CG Duff
Hi,
My post is saying that I don’t see why we should have this policy – I am not agreeing with it.
Tommi Heinonen says:
April 5, 2010 at 10:29 pm (UTC 12 )
One must remember that althought it would benefit the driver the owner of the car can see this just as a cost. The act by government is therefor (in my opinion) justified.
iswady says:
April 9, 2010 at 3:26 am (UTC 12 )
i think taxi cameras is good to get safety for taxi driver.
finance says:
April 14, 2010 at 3:24 pm (UTC 12 )
it seems it could be considered government
because now the situation out there is very susceptible
tarif says:
April 20, 2010 at 5:23 am (UTC 12 )
Taxi cameras?? well…it will make a safety for the driver and passenger…
cabee45 says:
April 20, 2010 at 9:19 am (UTC 12 )
Great chatter, Interesting to note that most of the federation member companies are opposed to cameras, especially smaller companies in rural areas. Well known fact within industry that the big players, coop, combined etc want to bureau (dispatch from one call centre) for the whole country. This can be an advantage to smaller companies as it is expensive to run a small operation. These compliance costs asssociated with cameras will just force the smaller companies into a situation where they will have no choice but to have there work dispatched from larger companies. What is up with the national govt?, dont they know what is going on out there in taxi land?Cameras will not stop the crime.
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