Uber vs Licensed Taxi Drivers: A War Between Technological Standards

Sharing economy firms, based on online platforms, have become strong competitors of traditional firmsin many services sector, including the taxi industry. The aim of this article is to provide an economic framework for the analysis of this rivalry. Besides the literature on sharing economy, the characteristicsof online platforms are summarized, which explain the quick expansion of successful sharing economyventures. Based on the theoretical literature it is shown that for service providers, the choice between sharing economy platforms and traditional firms resembles the ”standard wars”, the competition between technological standards. A coordination game is presented to analyze the competition between taxicompanies and Uber. The model not only reveals the different equilibria and the possible strategies of the players, but also shows the importance for adequate regulatory policy.