Price Floors on Trial
By Bryan Caplan
The Institute for Justice is suing to overturn Nashville’s sedan and limo price floors:
Can government force transportation businesses to charge a minimum
price to protect politically connected companies from competition?
That is the question the Institute for Justice (IJ) and its clients
seek to answer in federal court with a challenge to Nashville’s new
limousine and sedan regulations.
June 2010, the Metropolitan County Council passed a series of
anti-competitive regulations requested by the Tennessee Livery
Association–a trade group formed by expensive limousine companies.
These regulations force sedan and independent limo companies to
increase their fares to $45 minimum.
The regulations also prohibit limo and sedan companies from using
leased vehicles, require them to dispatch only from their place of
business, require them to wait a minimum of 15 minutes before picking
up a customer and forbid them from parking or waiting for customers at
hotels or bars. And, in January 2012, companies will have to take all
vehicles off the road if they are more than seven years old for a sedan
or SUV or more than ten years old for a limousine.
Anyone want to make odds on the outcome of the trial?