The Financial Dwindling of Traditional Taxi Service Providers and the Need to Regulate E-hailing Service: A Case Study of Uber Technologies Inc. Regulation

The Financial Dwindling of Traditional Taxi Service Providers and the Need to Regulate E-hailing Service: A Case Study of Uber Technologies Inc. Regulation

Abstract
Conventionally, fares or commuters always hail empty taxis on streets for commercial services especially during rush hours. There is no doubt that these empty cabs offer needed services although their services may be lacking in terms of comfort, time coverage and efficiency. Therefore, there are noticeable lapses in their services which have necessitated the emergency of electronically or mobile application based service providers which are common known as Transportation Network Company (TNC). TNC is often referred as e-hailing or ride-hailing service. It is an online based company that matches passengers with drivers through websites and mobile applications. In other words, it is a turning point in tech-revolution in transportation sector today across globe. The E-hailing business involves the use of social networks, smartphones, and GPS navigation devices, making it possible to share rides and order taxis and or other forms of transportation with as little as a tap or click on a mobile phone. The advance of smartphone technology has enabled customers to hail taxis through their smartphones globally. E-hailing is a new revolution in transportation system. Traditional ridesharing of then was mostly based on getting from one point to another without the use of technology. E-hailing services are regulated in most jurisdictions and also prohibited in some due to its attendance consequences towards traditional taxi industry. Regulations can include requirements for driver background checks, fares, the number of drivers, licensing, minimum wage, taxations, and insurance. To provide a systematic account of the impact of e-hailing applications, we first look at the financial implication of the new trendy to the conventional taxi service providers and government as well, with regard to ability to pay needed taxations using Uber Technologies Inc, as a case study. Hence, our concern is also on the spatial equilibrium model between the “traditional taxi services and app-based taxi services” and that not only balances the supply and demand of taxi services but also captures both the taxi drivers' and customers' relationship in a well-regulated taxi market.

1.1. Background to the Study
Transportation is one of the economic sectors that has successfully undergone revolution due to the advance in technology. The advance in technologies brings about a revolution in transportation by replacing and displacing older energy means and techniques of doing things. In olden days before the invention of automobile horse, oxen, donkey, bicycle, etc. were notable means of transportations.  According to Sweeny (2005), the first transportation revolution occurred so very long ago that all memory of it is lost to history, and that it occurred at all can only be gleaned from the archaeological record 4500 BC or perhaps slightly earlier: a bit over five thousand years following the last retreat of the glaciers and the end of the Ice Age.
Advances in technology have allowed people to travel farther, explore more territory, and expand their influence over larger and larger areas. Even in ancient times, new tools such as foot coverings, skis, and snowshoes lengthened the distances that could be travelled. As new inventions and discoveries were applied to transport problems, travel time decreased while the ability to move more and larger loads increased. Innovation continues as transport researchers are working to find new ways to reduce costs and increase transport efficiency.
The first earth tracks were created by humans carrying goods and often followed trails. Tracks would be naturally created at points of high traffic density. As animals were domesticated, horses, oxen and donkeys became an element in track-creation. With the growth of trade, tracks were often flattened or widened to accommodate animal traffic. The modern history of road transport also involves the development of new vehicles such as new models of horse-drawn vehicles, bicycles, motor cars, motor trucks and electric vehicles (Sweeny, 2005).
The history of rail transportation dates back nearly 500 years, and includes systems with man or horse power and rails of wood (or occasionally stone) before the emergency of aviation. What necessitate the emergence of aviation industry was the humanity's desire to fly likely dates to the first time man observed birds, an observation illustrated in the legendary stories of Daedalus and Icarus in Greek mythology, and the Vimanas in Indian mythology. Much of the focus of early research was on imitating birds, but through trial and error, balloon, airships, gliders and eventually powered aircraft and other types of flying machines were invented. Kites were the first form of man-made flying objects, and early records suggest that kites were around before 200 BC in China. Leonardo da Vinci's dream of flight found expression in several designs, but he did not attempt to demonstrate flight by literally constructing them. During the 17th and 18th century, when scientists began analysing the Earth's atmosphere, gases such as hydrogen were discovered which in turn led to the invention of hydrogen balloons before the invention of first aero plane (Sweeny, 2005).
Therefore, technology is constantly evolving; the state of the transportation sector in the world is evidence of how fast technology evolution is moving. More and more-hailing businesses are emerging both in the world at large as more people are becoming accustomed to its easy means. One sure thing is that people need to move around every day it is a constant and an inevitable part of life. E-hailing has tapped into this necessity and transformed it into a mass source of income not just for the business owners alone but also for the general public who partake in their initiative. It has created an easy avenue for individuals worldwide to make a living with the rising unemployment rate in many countries.
The e-hailing business involves the use of social networks, smartphones, and GPS navigation devices, making it possible to share rides and order taxis and or other forms of transportation with as little as a tap or click on a mobile phone. Research shows that e-hailing provides service in less populated or poorer areas that are not regularly served by taxicabs, and charging lower rates than taxicabs, since taxicab rates are often set by local jurisdictions. There are many establishments that are engaged in E-hailing services like Easy, Grab, Lyft, didi, Ola Cabs, etc. but our research interest is Uber Technologies Inc. Uber  is one of the notable E-hailing service providers who has fared well in transportation business. It is a peer-to-peer, taxi cab, food delivery, and transportation network company that began 2009 with its headquarters in San Fransisco, California headquartered operating in 633 cities worldwide. Its platform is accessed through its websites and mobile apps.

1.2.Statement of the Problem

Every invention or discovery has its own associated problem(s). E-hailing as a new revolution in transportation industry no doubt has easy transportation but it has some dark sides which will constitute our operational problem in this study. Traditional ridesharing of then was mostly based on getting from one point to another without the use of technology. E-hailing is a turning point for transportation today across globe.
In recent years, many e-hailing services have been established as an online-platform to connect customers and transport operators, facilitate their matching, and allow them to communicate more efficiently. There is no doubt that e-hailing improves the quality of on-demand transport services such as safety, convenience, and seamless experience and in particular, shorter waiting time. Their services have greatly outperformed the existing traditional taxi-commuter operation. Recently, researchers have been investigating on the equilibrium of the taxi market. By requesting rides via mobile applications, customers of these ride-sourcing services are matched efficiently to affiliated drivers who drive their own noncommercial vehicles to provide for-hire rides. Such on-demand e-hailing services significantly reduce the search frictions and bring together riders and drivers with very low transaction costs (Anderson, 2014).
Hence, there is unequal competition between traditional taxi services and app-based taxi services. This called for regulation to ensure spatial equilibrium in the system. Taxi regulation has been the subject of many studies across globe. Many nations have legislated on the operational mechanism of app-based cabs. For instance, in Malaysia report shows that “more than 50% of taxi users use the smart phones or e-hailing applications to get taxi service, according to Minister in the Prime Minister Datuk Seri Nancy Shukri. However, she said, only 14% of taxi drivers used the same service to obtain passengers (Bernama, 2017). This shows the level of unequal competition between e-hailing and conventional cabs.
The e-hailing service should be seen as a competitor to the conventional taxi operating method and as an opportunity for the taxi driver to balance service offers with market demands and trend. The Land Public Transport (Amendment) Bill 2017 in Malaysia, among others, proposes that the definition of "e-hailing" is included in the First Schedule of the Land Public Transport Act 2010 and makes the service, among others, Grab and Uber a legitimate public service (Bernama, 2017). Nancy said e-hailing service should be permitted to operate as intermediary services, subject to provisions and legal enforcement. The regulatory move is to ensure the use of technology brings a positive impact not only to taxi drivers, e-hailing vehicle drivers and passengers but also gives room to local entrepreneurs who are keen to explore opportunities in the industry through the development of local application systems (Bernama, 2017).
Hence, the major criticism by the taxi industry against e-hailing service providers are they often avoid regulations that apply to passenger transport and that e-hailing are illegal taxicab operations. All these accusations are necessitated by the dwindling nature of financial resource of traditional cabs drivers which constitute a major problem especially unemployment in society.

1.3.Research Questions
This study will be carried out to answer the following questions:
1.Under what institutional conditions should city governments regulate Uber for purpose of maintaining a fair, vigorous and sustained competition with regards to the traditional taxi industry?
2.What are the measures taken by the city government to ensure effective and prompt tax payment by e-hailing service providers as applied to traditional taxi industry?

1.4.Objectives of the Study
The study has both general objective and specific objectives. The general objective or main objective of this study is to investigate the need to regulate e-hailing services by focusing on its financial effect to conventional taxi industry. The specific objectives are:
1.To examine the effects of e-hailing on traditional taxi services
2.To identify the measures taken by the city government to ensure effective and seamless regulation of  e-hailing services
3.To investigate the financial challenges facing conventional taxi industry

1.5. Research Hypothesis
The followings are the research hypotheses to be tested in this study:
1.There is a significant relationship between the increases in the activities of e-hailing services and dwindling finance of traditional cabs drivers.
2.There is no significant correlation between measures taken by the city government to ensure effective and prompt tax payment by e-hailing service providers as applied to traditional taxi industry

1.6.Significance of the Study
The results from this study will educate the stakeholders in transportation industry and the general public on the emerging trend of e-hailing services and their associated problems. Findings from this study will also educate the city government and the general public on the need for the institutional framework saddled with the responsibility of regulating transportation and enforcement of tax duties to put searchlight on e-hailing service providers. This research will be a contribution to the body of literature in the area of economy, accounting and public administration thereby constituting the empirical literature for future research in the field.

1.7. Scope and Limitation of the Study
This study will cover the process of e-hailing services in relation to conventional taxi services. It will as well cover the activities of the tax collection and enforcement officers.

1.8. Limitations of the Study
The Major Limitations of the study will be:
Cost Limitation: There will be a cost limitation. This means that the researcher will not offer any gift or monetary incentives for the respondents to answer the questionnaire. This might result in certain prospective respondents choosing not to respond to the researcher.
Time Limitation: There are two types of time limitation that will be faced during the study. The study will be done in distance time in respect to the official deadline for submission. Hence the results would reflect the impact of the time constraint. The insights of the respondents will be observed during the period of the study. A more extensive study conducted over a larger time period or during a special period of time like when there will be higher numbers of issues, can include insights from respondents over a broader time period and can bring in further depth into the research.

Methodology
2.1. Theoretical Framework
The theoretical underpinning that guides this study is “the Incentive Theory of Motivation”. According to the theory, our actions are often inspired by a desire to gain outside reinforcement. The incentive theory is one of the major theories of motivation and suggests that behavior is motivated by a desire for reinforcement or incentives. According to Cherry (2018), incentive theory began to emerge during the 1940s and 1950s, building on the earlier drive theories established by psychologists such as Clark Hull. The incentive theory proposes that people are pulled toward behaviour that lead to rewards and pushed away from actions that might lead to negative consequences
Incentives can be used to get people to engage in certain behaviors, but they can also be used to get people to stop performing certain actions. Incentives only become powerful if the individual places importance on the reward. Rewards have to be obtainable in order to be motivating.
This theoretical framework of analysis enables us to understand the recent phenomenon of geometrical increment of e-hailing services in the transportation industry globally by investigating “The Financial Dwindling of Traditional Taxi Service Providers and the Need to Regulate E-hailing Service: A Case Study of Uber Technologies Inc. Regulation”.

2.2.Research Design
Due to the nature of investigation, this study will adopt “case study research design”. A case study is a carefully study of a particular research problem as bases of reaching conclusion about the entire population.  It is a rigorous study geared towards a meticulous understanding of a given social unit. The social unit may be an individual, a group of individuals, a community or an institution. They usually provide thorough, in-depth comprehensive as well as other information concerning the social unit in question.  It is often used to narrow down a very broad field of research into one or a few easily researchable examples. The case study research design is also useful for testing whether scientific theories and models actually work in the real world. A case study uses a variety of data gathering techniques like questionnaire, observation, interview, etc. to collected data from a sample unit.
The advantage of the case study research design is that a researcher can focus on a specific case where he has primary interest. In other words, in a case study, an investigator maps out a small study group which can be, one individual case, organization case, or one particular population. This helps in thorough and systematic examination of the case as the bases for inferential analysis (generalization). This type of study is popular in comparative politics.
But one basic lapse of case study is it has limited generalizability. Only a single unit or very few units are involved in case studies and such, the findings cannot be validly generalized to the entire population. Case study is usually associated with problem of deliberate exclusion of major part of population.   Hence, this study deemed it necessary to adopt this research design due to the nature of phenomenon under investigation.

3.3.Method of Data Collection

Method of data collection is way data can be collected for qualitative or statistical analysis. There are different ways information can be gathered. Method of data collection tells us where (place), how (manner), who (body) and when (time) in respect of the data collection for the study.
Due to the nature our research which has defined the method of data collection, this study will adopts “quantitative method of data collection”. Quantitative data is used for numerical description. They have numerical values. Data will be sourced through primary means can like observation, interview, documentary, etc. the data collecting instruments like  questionnaire, interview, observation and other primary sources of information will be painstakingly deployed.
Document is another very important source of data collection this study will heavly depend on. This is because sometimes certain information required by a researcher is available in journal, books, articles, official reports, newspapers, magazines etc. It enables the researcher to get background knowledge of the problem to be investigated. Documentary sources reveal what has been done in a particular field. A wealth of information on all aspects of social sciences may be obtained from documents.

Method of Data Analysis
To analysis, is to systematically examine something especially complex issue in order to understand its constitute parts and how they relate to each other.  In other words, it is an act of breaking down or separation of a whole into different elements. It is a procedural task. Hence, data can be analyzed either through descriptive method or inferential method depending on the method of data collection. Data analyses are fundamental aspects of the conduct of an empirical research.
Hence, to ensure accurate, unbiased, complete and insightful reporting of the analytic treatment of data this study will adopt “inferential method of data analysis”. The presentation of findings should be precise as much as possible to avoid concealing vital information. Inferential method is the process of reaching a conclusion about something from already established fact or premises. It is method of moving from one statement considered as true to another whose truth depends on the first statement. To infer is to form or reach a conclusion based on known facts.