Before he founded Green Cab, longtime Ohio entrepreneur John Rinaldi was more of a businessman than a taxi expert. As a result, he built a taxi company that looks a little different from the norm. Where most taxi companies rely on centralized telephone dispatching, John automated the process with software that tracks how busy each individual driver is. Where most taxi companies charge their drivers outlandish lease fees for the privilege of driving a company-owned vehicle, John came up with a simple revenue split to make sure both drivers and the company stay in the black. Where most taxi companies use a meter, John decided his small, college-town community was best served by a flat, $3-a-head fare.
All those changes added up to wild success: Green Cab’s hometown of Athens, Ohio, went from a place with next to no taxi service to one that was served by a full fleet of modern vehicles.
When John looked to expand his successful business model to similar college towns, though, he discovered yet another thing he had not known about the taxi business: In most cities, starting a taxi company is illegal.
By sheer coincidence, Athens (where John went to college) did not have any restrictions on starting a new taxi company, which meant things were wide open for Green Cab’s innovative business model. But Bowling Green, Ohio—a town similar to Athens in many ways—had restrictions. When Green Cab’s business manager showed up at City Hall in Bowling Green to apply for new taxi permits, he was actually openly laughed at. Bowling Green, like many cities across the country, capped the total number of taxis that were allowed to operate. Bowling Green law allowed only 16 taxi permits, all of which were in use, and that was the end of the story. Green Cab’s innovations were not just unwelcome; they were illegal.
Enter the Institute for Justice. As part of IJ’s decades-long project of standing up for innovation and against protectionism in taxi markets across the country, we teamed up with Green Cab to file a lawsuit against the city of Bowling Green, eager to show the world a concrete example of the power of allowing transportation innovation.
That concrete example (along with IJ’s lawsuit and accompanying media coverage) made a quick difference: Within mere days of our lawsuit, Bowling Green’s city council introduced legislation that will repeal its taxi cap. We expect to have Green Cabs rolling through town soon.
This rapid surrender on the government’s part demonstrates that Bowling Green never needed its taxi cap in the first place—and it should not have taken a lawsuit to force city officials to realize this. In a just world, a city’s response to an innovative business should simply be “Welcome,” not “Come back with a lawyer.” In the real world, though, entrepreneurs need IJ. Fortunately—much like one of John’s Green Cabs—we are happy to show up when needed.
Robert McNamara is an IJ senior attorney.