Friday 26 October 2018

Why Waiheke Island taxi drivers are like surfers

This New Zealand Herald article caught my eye this week:
Two Auckland-based taxi drivers claim they have been subjected to bullying, racist remarks and had their tyres slashed by local drivers while working on Waiheke Island.
Waiheke Island-based companies Island Taxis and Waiheke Five-O say there's been a recent spike in the numbers of "pirate" Auckland drivers bringing their cars over on the ferry and poaching business off them at weekends.
Island Taxis driver Richard Cannon told the Herald seven or eight drivers had been "clogging up the rank" at the Matiatia Wharf ferry terminal and poaching "about a third" of local drivers' income.
Taxi ranks are what economists refer to as a 'common resource'. They are rival (one taxi driver parking on the taxi rank reduces the amount of space available for other taxis), and non-excludable (it isn't easy to prevent taxis from parking at the rank). The problem with common resources is that, because they are non-excludable (open access), they are over-consumed. In this case, there will be too many taxis (including taxis from the mainland) competing for taxi rank places (and customers) on Waiheke Island.

The solution to the problem of common resources is somehow to convert them from open access to closed access. That is, to somehow make them excludable. And it seems that is what the vigilante actions of the Waiheke drivers is aiming to do - to exclude the mainlander taxi drivers from operating.

This is very similar to how surf gangs operate to exclude some surfers (particularly those who are not locals) from the best surfing spots, as I have blogged about before (see here and here). There is no government intervention to manage the common resource, so it is up to the user community (taxi drivers) to do so. As 2009 Nobel Prize winner Elinor Ostrom noted, this requires that the user community can form a homogeneous group (within which trust is high), with common goals for the resource (in this case the taxi rank); and that both the boundary of the resource and of the community are well defined. Local taxi drivers are a (relatively) homogeneous group, and the boundary of the resource (taxi rank and customers) and the community (taxi drivers must be licensed) are well defined. But only until the outsiders come in, at which point the group is no longer homogeneous, and the previous private solution to the common resource problem breaks down. Resulting in violence between local taxi drivers and mainlanders, which is similar to surf gang violence.

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