I should have used the word fragmented. Fragmentation reduces the efficiency gains from physical network effects. If the overall network isn't fragmented, you get smaller average distances between driver and rider.
Another efficiency gain is from replacing a human dispatcher with a ML model.
Isn't this just an argument for a monopoly? Several competing taxi services would be fragmented. One monopoly taxi service would be more efficient. But in that case, I'd argue the municipality should just operate it as part of the public transit system.
It's a monopoly in the narrow vertical, but that power is diluted given the existence of close substitutes (driving yourself, bus, train, and some remaining old-school taxis). No doubt there is still some monopoly power, though.
> I'd argue the municipality should just operate it as part of the public transit system.
I'd probably prefer it if you just regulate their monopoly power. I don't like the idea of each municipality or country having to write their own software for an Uber-like platform. Seems like a lot of duplicated effort. And after the Obamacare website cost blowout, I don't trust government to write software well, it'd end up as money being stolen by people like Accenture.
Another efficiency gain is from replacing a human dispatcher with a ML model.