Governance and regulation of ride-hailing services in emerging markets: challenges, experiences and implications

Between 2010 and 2019, the e-hailing industry -understood as digitally enabled transport services that connect spare capacity or idle goods with demand for mobility- has seen a total disclosed investment of USD56.2 billion (Holland-Letz et al., 2019). Some forecasts suggest an expected growth of 25% by 2025 (considering business areas such as bike-sharing, ridesharing, car-sharing, and ride-hailing), with most investments concentrating on companies originating in the United States, China, and Europe (Wolff, Possnig & Petersen, 2019). These companies have rapidly expanded their operations to cities globally, including significant investments in cities in the global south were also a fertile ecosystem for start-up investments. Entrepreneurship has given rise to homegrown companies seeking to fill gaps in the urban mobility market through data-driven innovations and adapted versions of services for the local conditions (WEF, 2019). These investments and growing interest from stakeholders at all levels – investors, operators, users, incumbents, and decision-makers – make ride-hailing a topical concern that re-defines urban mobility and what it may mean in the future. Moreover, the development, expansion, and operation of urban mobility start-ups in the sharing economy suggest that emerging innovations for urban mobility such as ride-hailing are here to stay in one form or another. The process in emerging markets has outpaced decision-making and law-makers' ability to produce guidelines and regulations for the operation and control of ride-hailing. In Latin America, apart from Mexico and Brazil, Ride-hailing has yet to be regulated on a national scale. Currently, the window of opportunity to regulate Ride-hailing services shaping their evolution instead of just responding to it is rapidly closing as new large-scale competitors such as DiDi enter emerging markets, and new forms of app-based ride-hailing services emerge from local and international players alike. This paper seeks to shed some light on the different considerations for regulation and governance of ride-hailing platforms in emerging markets, highlighting their positive and negative externalities. Building on an extensive review of the literature and secondary sources, we outline Ride-hailing's identified and potential effects on users (providers and consumers), incumbents, and society. Based on the welfare impact’s structure, we identify the significant challenges that regulators face in understanding, monitoring, evaluating, and regulating this type of transportation innovation. Finally, the paper proposes a framework for approaching such mobility innovations from governance and regulation perspectives. In a context of exponential growth in research and innovation in urban mobility in general and Ride-hailing, a rigorous review of the literature and a critical framework for understanding governance and regulation in such services in rapidly changing contexts is a timely contribution. Keywords: Ride-hailing, Regulation, Governance, Latin America