Case Study: Transferring the “Uber-model” into a cooperative
When a cooperative meets a sudden competition from private enterprises the solution could be a digital platform cooperative.
The only taxi company in Reykjavik, Iceland’s capital city, is a cooperative, established in 1947 by a group of car owner who decided to start a taxi service. The cooperative, Hreyfill is protected against competition by law.
Now, increased pressure is on opening the market and allow new actors to enter the market. The present cooperative’s reaction of the potential new competition could be to open for digital platform organization, like the one Uber uses.
The main reason for the regulation which limits competition of taxi service in Reykjavik is a quota system of number of taxies drivers, regulated by authorities. According to law the taxi drivers must have employee relationship to an operating taxi station, although the cars are owned by each individual driver.
Many complains of lack of taxis, which stimulates the discussion of opening the doors for new taxies in the market. Increased pressures are on politicians to allow new taxi providers on the market.
Meeting this new competition is a challenge for the Hreyfill cooperative. One way is to establish a digital platform as an alternative to the traditional call-up taxies. Hreyfill has already started to implement a digital solution for order a taxi.
The lesson is that the gap between privately owned taxi services and taxi providers like Uber is shrinking. Privately owned taxi companies can easily copy the digital advantages developed by Uber and similar transportation services. The customers would then not notice any difference whether they order a taxi transport from a car belonging to a sharing economy or if the taxi belongs to privately owned or cooperative – except maybe for the fare price.
Author: Emil Karlsson, Director Centre for Retail Studies, Iceland
Date: 21 Feb 2019