Hong Kong Ride-Hailing Floor Price to Prevent Involution
Hong Kong Considers Price Controls for ride-Hailing to Curb Competition
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Government Weighs Intervention to prevent “Involution”
Hong Kong authorities are exploring the use of existing regulations to control ride-hailing prices, aiming to prevent overly aggressive competition-described as “involution”-among platforms like Uber, Tada, Amap, and Didi Chuxing, according to a report by the South China Morning Post. A source familiar with the matter indicated the government could leverage a section of the Road Traffic Ordinance allowing the chief executive to set minimum fares for public service vehicles, excluding franchised buses.
The concept of “involution” refers to a situation where increased effort yields diminishing returns,often resulting from intense,unproductive competition. Authorities fear this could destabilize the ride-hailing market.
Legal Framework and Licensing System
The potential price controls come as Hong Kong moves to formally regulate the ride-hailing industry, which has operated in a legal gray area for over a decade. On Thursday, transport authorities unveiled a proposed regulatory framework that includes a licensing system for platforms, drivers, and vehicles, requiring specific standards for vehicle age and insurance South China Morning Post.
Concerns Over Legal Challenges and Alternative Regulation
However, a lawmaker cautioned that directly controlling prices could lead to legal challenges. The lawmaker suggested an alternative approach: regulating the number of licenses issued to ride-hailing operators and drivers. This method could manage competition without directly interfering with market pricing.
Amap’s Connection
It is indeed worth noting that Amap, one of the ride-hailing platforms operating in Hong Kong, is operated by Alibaba Group Holding, which also owns the South China Morning Post.
Relevant Ordinance Details
The Road Traffic Ordinance grants the chief executive the authority to “make regulations to provide for the fares which might potentially be charged on any public service vehicles other than buses operated under a franchise … and the fees which may be charged for the hire of a public service vehicle.”