Honolulu, Hawaii Ridesharing Price Control Ordinance Vetoed | Heartland Institute

If six council members vote to override the veto, the ordinance will take effect, putting the City Department of Customer Services in charge of determining price ceilings for fares drivers may charge during high-demand periods of time, known as “surge pricing,” when picking up passengers in Honolulu.

Calls for Price Flexibility

Adam Smith, an associate professor of economics at Johnson & Wales University and a policy advisor for The Heartland Institute, which publishes Budget & Tax News, says government intervention distorts local transportation markets, raising prices and reducing access.

“A lot of things that are done through companies, like transportation, are now done through markets directly,” Smith said. “Having people contracting with people, you obviously need to allow the price to move around to be able to let those markets clear. When you don’t, or you put an arbitrary cap on price, then you’re going to have a shortage of that market. Fewer suppliers are going to meet demand, and they’re going to not meet demand in times when you most want it.”

Consumers First

Keli’i Akina, president of the Grassroot Institute of Hawaii, says market principles put people in the driver’s seat.

“When prices rise, more ride-hailing drivers are incentivized to help customers,” Akina said. “This market mechanism helps give more power to consumers. Customers can already see the higher price beforehand, and they can decide to accept or decline the ride. In this way, the consumer is king.”

“Putting a cap on surge pricing would cut off choices for consumers,” Akina said. “The high price is a signal to ride-hailing drivers that their services are urgently needed. This can help inspire more drivers onto the road to help customers.”

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