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Last Taxi to Europe

The contrast between Uber’s reception in America and Europe highlights how European regulatory structures all too often protect incumbents and stifle innovation. Europe’s governments should amend their rules, encouraging entrepreneurs to develop cutting-edge business models at home, rather than import them from abroad.

ROME – The contrast between Europe’s resistance to Uber and America’s warmer reception for the ride-sharing service highlights once again how European regulatory structures, in principle designed to protect consumers, end up protecting entrenched suppliers and stifling innovation. This contrast can also point us to the ways Europe’s governments should amend their rules, encouraging entrepreneurs to develop cutting-edge business models at home rather than being forced to accept innovations only after they have become best practices abroad.

Anti-Uber protests by cab drivers are part of a long tradition of established suppliers challenging new technologies that could cost them their jobs. But when, say, the Luddites of the early nineteenth century protested against newly developed textile machinery by smashing it, the authorities did not intervene to limit new technologies. As a result, the Industrial Revolution ultimately led to an unprecedented increase in living standards around the world.

But, by the time supermarkets started to enter the retail sector in the second half of the twentieth century, European governments’ approach had changed. Many countries enacted regulations in the early 1970s to protect existing small shops against competition; as a result, the development of more modern distribution systems was delayed. A generation later, these restrictions were lifted in response to consumer pressure.

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