UPPSATSER Kulturgeografiska institutionen

Why do regulatory practices towards Uber diverge in the globalized economy?

Comparing regulatory responses and attitudes towards Uber in the U.S. and Sweden.

Gustaf Palmér Course: 2KU051: Master’s thesis in human and economic geography 15 hp Term: VT2017

ABSTRACT Palmér, G. 2017. Why do regulatory practices towards Uber diverge in the globalized economy? Uppsatser Kulturgeografiska institutionen, Uppsala universitet. Master’s thesis in human and economic geography 15 hp, VT2017. With the increase in technological innovations and digital applications, a new form of economy has emerged; the sharing economy. One company that operates within the sharing economy is Uber, a peer-to-peer based platform that connects private drivers with passengers. Since the Uber application is applicable on a global scale independent on underlying regulatory frameworks, conflicts have arisen between incumbent firms and Uber, which has resulted in a discussion regarding how states should respond to the rapid expansions of Uber.

Through collection of material that describes the regulatory process towards Uber and how attitudes are being formed, this study aims to nuance and clarify the regulatory responses and attitudes towards Uber. By using two countries of analysis; the U.S. and Sweden in combination with neoliberal and institutional theory the study describes the variation of regulatory processes within these countries. The result shows that the expansion of Uber demonstrates neoliberalism as a widespread phenomenon that drives market liberalization forward. Simultaneously the expansion of Uber has lead to interventionist actions taken by nations in order to protect incumbent firms, where Uber practices has both been the subject to regulations and further conflicts regarding regulatory and institutional landscapes. Keywords: Uber, Uber regulations, political economy, sharing economy, economic geography. Supervisor: Associate professor Johan Jansson

TABLE OF CONTENTS 1. Introduction 1 1.1 The emergence of Uber and conflicts with the traditional taxi sector 1 1.2 Aim and research questions 3 1.3 Delimitations 3 2. Method 4 3. Theory 8 3.1 Neoliberalism in political economy and economic geography 8 3.2. Institutional theory 12 4. Background 15 4.1 Uber 15 4.2 Previous research regarding Uber, the sharing economy, policies and regulations. 16 5. Conflicts, attitudes and regulatory responses towards Uber in the U.S. and Sweden 20 5.1 The taxi-driving sector in the U.S. and Sweden. 20 5.2 Regulations and market coordination forms regarding the traditional taxi industry in the U.S. and Uber. 20 5.3 Regulations and Market coordination forms regarding the traditional Swedish taxi industry and Uber. 22 5.4 Legal cases and responses towards Uber in the U.S. 25 5.5 Legal cases and responses towards Uber in Sweden 29 6. Analysis 34 6.1 Differences and similarities regarding regulations and responses towards Uber in the U.S. and Sweden 34 6.2 Varieties of capitalism as an analytical tool in understanding the differences between Uber practices in the U.S. and Sweden. 35

6.3 Neoliberalization or interventionism, the role of institutions in the U.S. and Sweden 37 7. Conclusion 39 7.1 Future research 40 8. References 42 8.1 Literature sources 42 8.2 Internet sources 45

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1. Introduction

1.1 The emergence of Uber and conflicts with the traditional taxi sector

“The ride-hailing service Uber is only six years old, yet it has already inspired a host of imitators, such as Lyft, Wingz and Taxify. It has also sparked fierce opposition from the taxi industry, which is being undercut by Uber’s business model” (Sobczak 2016). During the last decade, technological inventions and the rapid development of both the Internet and telecommunications has created a change in the traditional ways of transactions within various markets. This can be exemplified by the taxi industry, originally a typically homogenous market governed by different forms of licenses and sets of regulations in order to control the market. However, with the emergence of Uber, a company that works through a peer-to-peer sharing platform that connects private drivers with passengers by using a cellphone application, the traditional market form within the taxi industry has been challenged. One key difference between Uber and the traditional taxi sector is the Uber applications applicability in any given geographical area1 in disregard to the underlying regulatory and institutional landscapes that they operate within. The app can be seen as a time-space shrinking technology, since individuals and organizations deploy technology in order to achieve certain means to an end (Coe, Kelly and Yeung 2007, p.123). According to Dicken (2007) the impact of time-space shrinking technology has had a significant impact on global shrinkage. And time-space shrinking technology per se has decreased the time consumption of transferring communication which has spurred globalization and decreased the time for information flows on a global scale (Dicken 2015, p.83; Coe, Kelly and Yeung 2007, p.128).

The development of Uber and the problems that arise with the proliferation of these services are closely related to one of the main driving forces behind this change: the emergence of new technological development and mobile applications; that has created new platforms who connects buyers and sellers directly; more commonly named as the sharing economy. By 2015 the amount of billion dollar valued sharing economy companies totaled to 17, many of which were established in the 2008 recession and now operates on global, national and regional levels. Where companies that operate within the sharing economy can be categorized in four different sectors, including: transport (Uber & Lyft), housing (Airbnb), goods (Etsy & Ebay) and money (LendingClub and Prosper) (Koetsier 2015).

Since the emergence of the sharing economy and its increased impact on the global economy, many questions have arisen. The two biggest sharing economy platforms - Airbnb and Uber have both been subject of an increased regulatory and political battle. While proponents of the sharing economy claim that these new technologies will have outcomes

1 It is important to state that there are some underlying requirements, which includes internet connection, a cell phone and the Uber application

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that empowers ordinary people, increases efficiency and lowers carbon footprints; the opponents claim that the sharing economy is aimed towards an economic self-interest rather than sharing, and that it thrives on being predatory and exploitative (Schor 2014, p.1). This study investigates how the emergence and growth of Uber affects the traditional taxi sector, which comprises a conundrum of processes and actors. The Uber application uses a platform that is applicable on a global spatial level. However, these universal transaction platforms can create conflicts between previously settled market arrangements and institutional and regulative forms; on national, regional and city scales. By using Uber as an empirical example this study investigates the conflict that arises between previously settled market arrangements and Uber. Since Uber operates within a grey area regarding the regulatory landscapes and institutional settings there is a clear area of conflict that occurs between incumbents and Uber. This conflict comprises of regulators, lobbyists, Uber, traditional taxi companies, citizens, consumers as well as taxi drivers and Uber operators. Given the attributes of the Uber platform and how it changes the process of consumption this study explains the role that the surrounding institutional environment plays, depending on different forms of national capitalism systems and how new peer-to-peer transaction platforms work in conjunction with neoliberal market ideas. By using two countries of analysis, The U.S. and Sweden the study investigates how the responses towards Uber are formulated. This is done by applying the Varieties of capitalism (VoC) theory that enables an approach to distinguish differences in political systems on a national level. According to the VoC theory the U.S and Sweden are defined by two different capitalist systems, the U.S. as a Liberal Market Economy and Sweden as a Coordinated Market Economy (Thelen & Streeck 2005). Institutional theory further explains how the differences in practices towards Uber vary depending on national, regional and local institutional settings. This can be seen both from the institutional environment, which includes norms, conventions and culture (Martin 2001, pp.79-80), and the institutional arrangements that include underlying regulatory frameworks that govern and structure firms, labour unions, markets and regulatory agencies (Martin 2001, p.80). In combination with the VoC and institutional theories a neoliberal theoretical standpoint is taken. Neoliberalism is seen as a force that creates processes that open national economies to global actors such as Uber, and drives privatization, marketization and deregulation forward (Larner 2003, p.509). This study further investigates if the emergence and spread of Uber is driving the neoliberal thoughts forward or if states use interventionist methods to inhibit the growth of Uber and the Sharing Economy.

While using the U.S and Sweden as the two countries of comparison one can more clearly distinguish the differences regarding approaches towards Uber. In both countries of analysis there are also interesting tendencies to highlight and further articulate. Since the taxi sector in the U.S is in larger extent regulated in comparison to Sweden; this creates an interesting topic to analyze and to some extent contradicts the approach of seeing the U.S. as a Liberal Market Economy and Sweden as a Coordinated Market Economy2. The differences in 2 Regarding the taxi sectors in respective countries.

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institutional settings in the U.S. and Sweden also provides an empirical setting where one can see how the process of regulation and policies towards Uber might differ depending on differences in institutional norms and institutional regulatory landscape. This is also applicable the different geographical scales and levels where Uber plays an important role depending on differences on national- state- and city scales. 1.2 Aim and research question The aim of this research is to investigate if there are any differences in attitudes, policies and practices towards Uber, and in what ways they differ; based on two countries of comparison; the U.S. and Sweden. By investigating how new forms of transactions that occur within sharing economy affect the preexisting companies; Uber will be taken as an empirical example. By examinating how Uber has challenged the traditional taxi-sector and how Uber applies to regulatory landscapes within the countries of analysis. The aim is to further explain and highlight the conflicts that occur through the spread of digital platforms and how they change the way that services are being consumed between preexisting regulations, incumbent firms and other actors. Research questions:

• How has the conflict between Uber and preexisting institutional frameworks, market actors and organizations taken shape?

• How are the regulative responses towards Uber formulated and do they differ

between the U.S. and Sweden? • To what extent are the regulatory practices against Uber pointing towards neoliberal

or interventionist attitudes? 1.3 Delimitations Given the width of the sharing economy, only the reception towards Uber will be used in this comparative analysis. Since the sharing economy is a broad phenomenon, there is a plethora of companies that could be analyzed but Uber is chosen based upon the extent of their business (operating on a global level) and the access to material. Uber is also the company who operates within the sharing economy and has the highest valuation (Konrad 2016) and has been subject to legal battles and debates that provides a strong foundation for analysis. The focus will only be on Uber and not towards similar drive-hailing such as: Lyft, Curb or Heetch.

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2. Method In order to explain the difference in conflicts, attitudes, institutional frameworks and regulatory actions of Uber in regard to the two countries of analysis, a methodological approach based upon a qualitative case study is used. A qualitative study helps to explain the empirical setting and to answer questions of what, where, when and how (Babbie 2013, p.92). Regarding the two specific cases that are being investigated in this thesis, the qualtitative approach also helps to further nuance the multitude of different actors that are included in the emergence of Uber and the conclicts that arises. The choice of a qualitative approach is based upon its strength of explaining a specific phenomenon or case that helps to give an in-depth explanation of what is being studied (Bryman 2011). According to Baxter & Jack (2008) a case study approach should be considered when the focus of a study is to answer questions regarding “how” and “why”, when the researcher cannot manipulate the behaviour of involved actors in the study or when the research wants to cover contextual conditions that are believed to be relevant to the phenomenon under study (Baxter & Jack, p.545). Regarding the two cases that are being investigated in this thesis, the U.S. and Sweden, the statements by Baxter & Jack become viable in finding an optimal approach in explaining how the emergence of Uber has affected regulatory frameworks and attitudes within both the U.S. and Sweden. Meanwhile the methodological approach also creates a possibility to explain the underlying context of the research subjects, which involves many different actors; including: Uber, traditional firms, regulators, politicians, lobby organizations, opinion-formers and researchers. By considering all of the involved actors in combination with a case study a foundation is created that clearly explains the contextual contiditions that surrounds Uber and the new forms of transactions within the sharing economy. The choice of method can be seen as a way to nuance and further explain the impact of the Uber business model and how it affects a multitude of actors depending on underlying regulatory and institutional frameworks, differences in political systems and geographical scales. Similar studies regarding regulatory practices and attitudes towards the sharing economy and Uber often use a literature approach in order nuance the context and the multitude of actors who are involved in these processes. Likewise the main empirical material in this study is based upon literature and documentation that explains the regulatory responses, institutional conflicts and actor’s arguments for and against uber in combination with studies that treat the different possibilities in responses towards uber.

The selection of the U.S. and Sweden was based upon the differences in capitalist systems. According to the VoC the U.S. is seen as a liberal market economy and Sweden as a coordinated market economy. This selection provides an angle where it is possible to highlight how the regulatory responses and attitudes towards Uber are shaped and take form based upon the differences in capitalist systems. One argument for using the U.S. as one of the cases is because Uber was first established and emerged in the U.S. this creates an opportunity to further see how the process of regulations and conflicts has taken shape during a time-period that spans from the first establishment (2009) until today. In contrast the establishement of Uber in Sweden is a rather new phenomenon, where regulations and

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attitudes are still taking shape and the debate is still discussing how Sweden should respond to Uber. The selection of these two countries provides a platform where one can distinguish differences in the emergence of Uber, the U.S. case provides with information of how the nation and states has adapted to Uber, what extent regulations have been implemented and different resulst regarding the conflict between incumbent firms and Uber. In contrast the Swedish perspective gives an insight in how the emergence of Uber is being received within a country that hasn’t had the same time-period to adapt or react. By using the two countries of analysis the goal is to distinguish and explain how the emergence of Uber can be received. Meanwhile it is also important to state that the selection of the U.S. and Sweden creates complication, this is mainly based upon the differences in sizes and different geographical settings of the countries. Regarding the U.S. the population and nation size is much larger than Sweden, where the debate regarding Uber is taking place on both national, state and city level. This creates complications in both accessing to the material within all the states, where the selection was based upon the access to material and aiming to spread out the empirical findings depending on where the state is located. This can be exemplified by not only using west-coast states, instead seeking to diversify the geographical location of the states. However, the political leadership and party belonging to the politicians that run the different states has not been taken into consideration, something that can be seen as a complication; since the political ideologies that politicians apply could create different mindsets towards Uber. Regarding the Swedish case it is easier to comprehend the attitides and responeses towards Uber, since it mainly discusses Uber on a national scale where the involved actors own opionions e.g. the transporation board, taxi labour union, Uber, the Swedish taxi office are easier to distuingish.

The starting point of gathering the empirical material involved preliminary research that was conducted by reading up on public documentation, research articles, news articles, standpoints taken by different organizations, government reports and Uber. The public documentation and government reports were gathered by the use of public government databases from respective country of analysis. In Sweden two specific publications were found that were seen as of high relevance to the study. First the Swedish government’s official investigation regarding the taxi industry in Sweden (SOU 2016:86) that discusses the industries challenges and opportunities of the Swedish taxi industry in combination with the increase in sharing economy activity. The second source was the end publication from the Swedish tax office that maps how the sharing economiy affects the Swedish taxation industry. Gathering the material regarding Sweden, I could clarify that much of the public debate regards the institutional and regulatory frameworks for the Swedish taxi industry. Were actors including the Swedish transport board, Uber Sweden, the Swedish taxi Union, the Swedish Tax Office (Skatteverket) and media sources all discuss Uber practices. Since these sources have a different perspective regarding the attitudes and thoughts towards regulations and increase in Uber practices they help to further nuance the regulatory practices and attitudes that are formulated towards Uber.

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The U.S. material was gathered through a different process, where the starting point was based upon media articles in order to see differences in tendancies towards the expansion of Uber in the U.S. By using media articles it was possible to clearly distinguish how the reception and regulatory actions towards Uber differ depending on states. In turn this led to a pathway in order to find bills and political decisions taken mainly on state level and in some cases national or city levels; which gives the empirical findings a heavier foundation regarding regulatory responses towards Uber, by not only using media sources. In conjunction much of the literature regarding both the U.S. and Sweden were found through citations in peer-review articles where the selection process was based on the relevance to the topic, seeking to distinguish key terms and discussions that includes regulatory discussions, different attitudes, standpoints and Ubers effect the economy. While gathering information from different interest groups, actors, organizations, Uber, think tanks and labour unions research was thoroughly conducted in order to clearly distinguish which actors that are frequently discussing and involved within the research topic. The argument for using a broad variety of material helps improve the empirical findings by nuancing the broad spectra of actors that are involved in the discussion regarding the emergence and growth of regulatory practices towards Uber. Using research articles assists in providing in-depth information regarding the topic of investigation. This helps to further highlight what information is necessary in order to explain the uprising and changes in policies towards Uber, and the conflict with the traditional taxi industry. While picking out the information much thought has been taken in order to nuance the entire picture by using different forms of sources. This can be concluded by using both the pro and against arguments that are formulated by the different actors regarding the Uber debate; the proponents: think tanks, news articles and Uber themselves, while the opponents include incumbents, interest groups and policy advocates. Using the political standpoint in the case of states in the U.S also helps to show the variation of outcomes in practices, while simultaneously pointing out norms and attitudes that has arisen in parallel with the expansion of Uber. While gathering the empirical material it is important to note that the access to material differs depending on the countries of analysis. In the case of Sweden the public reports regarding Uber are very transparent and easily accessible. This leads to a difference in gathering empirical information while investigating the U.S. and Sweden. Since Sweden is a smaller country with a very strong bureaucracy it is easier to access the information provided by government and authorities. These documents include reports from the Swedish government and other authorities e.g. the Swedish tax office and transport board. As previously mentioned the differences in populations and geographical sizes of the countries of analysis I would claim that it is easier to find the Swedish debate regarding proponents and opponents towards Uber. According to my opinion this can also be influenced by my Swedish nationality; since it is easier to know where to look and gather material in Sweden than in U.S. since you are more accustomed to the systems and where to find the material. Meanwhile, the Swedish discussion is mainly based upon the debate between the Swedish taxi driver’s organization and Uber themselves; which nuances the debate together with the for- and against arguments formulated towards Uber. In contrast, the case of the U.S. is

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more complicated to find clear evidence on a national scale; where much of the debate is occurring on state or city level. Using media sources that highlights legal battles and regulatory actions towards Uber enables a method to find both general attitudes and the legal documentation that is provided by state regulators and governors. However, in all cases it was not possible to get access to the bill numbers, political opinions or the specific regulations, which lead to some of the empirical information regarding regulatory responses were taken from media sources. Furthermore it is important to state that the information taken from media could bring some complications. Even though media is often portrayed as a relevant source there could exist an ambiguity in gaining information about the author behind the articles. In turn this can lead to a legitimacy problem since one cannot be sure of the author’s knowledge within the topic (Bryman 2011, p.499). Bearing this in mind it is further important to conclude that media sources can highlight problems that otherwise go unnoticed; however, people’s norms might deviate from the views that the media portray (DiMaggio, p.265).

In order to further nuance the institutional landscape regarding both regulatory practices and norms, conventions and attitudes the media sources that are being used in the case of the U.S. are combined with material published by two think tanks, The Heritage Foundation and the National Center for Policy analysis. The reason for using think tanks as an empirical source is to help explain arguments that are formulated by proponents to the sharing economy and Uber. By using the media reports that highlights conflicts that have arisen since the introduction of Uber, in combination with reports published by think tanks one enable the possibility to find equilibrium and nuance the difference in attitudes and effects by Uber. This has been an undergoing process during the entire study, where much thought has been taken in order to provide a picture that explains both sides of the conflict regarding Uber, regulations and incumbent firms. Bearing the following methodological statements in mind it is important to clarify complications within the use of method. It should be stated that the methodological approach in gathering empirical material, there exists impossibility in validating that all empirical findings of relevance are included within the empirical chapter. This is based upon the fact that while performing this form of study it is impossible to ensure that no important empirical findings have been missed. This can further be explained regarding both the cases of the U.S. and Sweden where in-depth research has been performed, but there could be an error of margin regarding important facts that have escaped the literature research. Furthermore it is also important to conclude that the Swedish databases are easier to access material, and lack of material from the U.S leads to a position where the empirical material regarding U.S. states only includes certain states; where information was satisfactory.

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3. Theory

In order to lay a foundation that will nuance the responses and practices towards Uber, three theoretical standpoints will be taken. First, a Varieties of Capitalism (VoC) approach will be used; which becomes a useful tool in investigating differences of the reception of Uber; based on different national capitalist systems. The VoC tool provides useful insight in creating a contrast between the U.S. and Sweden. Besides the strength of enabling a comparative difference between capitalist systems, the VoC approach also provides a necessary platform for empirical analysis where market economies can be divided into two different systems: Liberal Market Economies (LMEs) and Coordinated Market Economies (CMEs). In order to highlight the institutional and political differences within the capitalist systems of analysis two further theoretical standpoints will be taken, firstly through a neoliberal perspective and secondly through the new institutional economic geography perspective. In combination these theoretical perspectives provide an in depth description of the differences, similarities, responses and interpretations of Uber; based on political systems, market coordination forms and institutional norms. The neoliberal discourse in economic geography gives an in depth perspective of the state's role in society. It also builds upon the thought process of the variegated role of the state as both an actor of deregulation and simultaneously an actor for regulation and intervention. In order to highlight and further describe the differences between Uber practices on different geographical levels, institutional theory will also be applied. By using institutional theory in combination with VoC and neoliberal theories, a foundation is created that both explains the regulative landscape that surrounds Uber and how attitudes and norms affect these outcomes. The institutional approach also applies a hands on concept in explaining the reason why nation-states apply regulations and policies within markets and different service sectors; and the reason why these forms variegate. 3.1 Neoliberalism in Political Economy and Economic Geography 3.1.1 Neoliberalism, from the Chicago school to the contemporary world Since the rise of markets and capitalism a main ongoing discussion has focused on what role the state should play in society and its influence to the economy (Weiss 2005, p.183). This can be simplified by dividing into two different political positions; the proponents for less or none state involvement or vice versa; the proponents for more state involvement. The proponents of less or none state involvement is the neoliberal tradition that is mainly based on the works of Milton Friedman and the Chicago school of economics (Weiss 2005, p.186) the tradition rests on the fundamentals of naturalization of market mechanics justified by efficiency (Peck & Tickell 2002, p.394) and was later operationalized by politicians like Ronald Reagan and Margaret Thatcher (Brenner, Peck & Theodore 2010, p.183). The neoliberals argue that the state should have a minimized role in the economy and only

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assigned to define property rights, enforce contracts and regulating money supply (Kotz, 2002 p.64) where only a deregulated market could produce an efficient allocation of resources (Weiss 2005, p.186). It is nevertheless important to state that many nation-states who have taken the turn towards neoliberalism have done so only partially; were some states move towards privatization of state-owned sectors while others have introduced greater flexibility in labour markets or implementation of monetarism (Harvey 2005, p.87). However, bearing the variation of neoliberalism in mind there are some key principles. Neoliberalism can be referred to as a macroeconomic doctrine, which tends to always include advocating of free markets, suspicion towards the strong state, tariff elimination and deployment of enterprise models; which allows market mechanisms to make states to be run like businesses (Ferguson 2009, p.170). The connotation of the word “liberalism” can also differ depending on countries and their political culture. In Europe, liberalism is seen as a term used by the left to criticize the right. This criticism is based upon the right having too much faith in the market system; and not paying attention to the state as a potentially important actor who creates values of equality and social justice. On the other hand, in American context liberalism is a term used by the right to criticize the left because of their attachment of using government power and encroaching on individual freedom in order to create equality and social justice (Barnett, 2005 p.7). 3.1.2 Varieties of Capitalism – Analytical tools for comparing different political systems in nation-states Since the emergence of neoliberal ideology and the emergence of capitalist states industrialized countries have created a change in traditional politics in regard to political systems and market-orientated ideas. In turn this change has created a new set of challenges within the contemporary political economy. One perspective in order to analyze the difference in capitalist systems is to use the analytical tools of Varities of Capitalism (VoC) (Streeck & Thelen 2005, p.42). The VoC is built upon a distinction between two different market economies: the coordinated market economies (CMEs) and the liberal market economies (LMEs) that can be seen as a national model defined by the institutional features within the countries boundaries (Streeck & Thelen 2005, p.50). The VoC creates an influential perspective in comparing variations of capitalism, which departs from analyzing the relationship between firms and their institutional environment (Ebner 2015, p.1). According to Brenner, Peck & Theodore (2010) the VoC approach has gained attention from the institutional geographies at the nation state scale. This approach can clearly distinguish the different ranges of path-dependent regulations and highlights the fact that neoliberalism is one of many different modes of advanced capitalist governance (Brenner, Peck & Theodore 2010, p.206). However, Gertler (2010) advocates that the VoC’s dualistic approach emphasizes on a reductionism of LMEs and CMEs as ideal categories and leaves few analytical measures of emerging capitalist places such as China, Brazil or India (Gertler 2010, p.5) or Mediterranean varieties of capitalism, which are applicable to countries in

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southern Europe e.g. Spain, France and Italy (Ebner 2015, p.2). Bearing this criticism in mind, varieties of capitalism in the political economy are usually differentiated into two different “main” branches. Firstly through coordinated market economies (CMEs) e.g. Germany, Japan, The Netherlands, Sweden, Denmark and Norway who all possess institutions that allow companies to coordinate and cooperate to improve products over the long run (Schröder & Voelzkow 2016, p.6). The CMEs seek to keep the previously built coordination abilities, e.g. collective bargaining or regulation of distributional outcomes such as wage and income inequality (Streeck & Thelen 2005, p.46-57). Secondly through the liberal market economies (LMEs) e.g. the United States, Britain, Australia, Canada which rely on market arrangements (Schröder & Voelzkow 2016, p.6) and has an interest in deregulation and creating an environment for increased market pressure (Streeck & Thelen 2005, p.46-57). According to Schröder & Voelzkow (2016) companies within the coordinated market economies function in relation with associations or the state in order to overcome game-theoretic dilemmas. In this context companies are less dependent on innovation and put larger effort in cooperation and creating environments for long-term production; however this can affect the mobility of innovational companies. On the other hand the liberal market economies hold a comparative strength by inventing new products; while the coordinated market economies enhance existing innovations (Schröder & Voelzkow 2016, p.6). In regard to the varieties of capitalism, Weiss (2005) states that there is no best system of political economy in order to generate growth in the global economy. CMEs are often seen as a stable alternative to LMEs, but firms have different abilities of innovation dependent on institutional structures and national innovation capacities (Weiss 2005, p.194). 3.1.3 The proponents of a strong state Contrary to the neoliberal argument is the “strong state” argument. Its protagonists do not see state power as the core problem, but as a solution to problems of national economic development. One empirical argument is the four Asian tigers, Japan in 1970s and later followed by Korea, Taiwan and Singapore. In all of these cases it could be concluded that state actors took a prominent and proactive role in order to coordinate and apply structural changes and upgrading the technology. All of the four countries national authorities pursued individual industrial strategies that they combined with import substitution and export orientation (Weiss 2005, p.195-196). From a political perspective (Christopherson 2002) states that there exists a broad variety of literature that analyses how politically constructed rules have been developed in order to govern markets in industrialized countries. This literature points towards the fact that national institutions in combination with their power and agency play an important role and influence on the private-sector and state actors (Christopherson 2002, p.2). Meanwhile the regulative process can be seen as a symptom of the unevenly developed institutional landscapes within contemporary capitalism that are shaped and reshaped depending on market-disciplinary reforms (Brenner, Peck & Theodore 2010, p.218). Thus it can be stated that the role of the state and its economical outcomes differ depending on what role the state plays and that there exists an ambiguity in its optimal role in order to perform the best outcomes. Besides the arguments of state power and the

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neoliberal trends of deregulation Weiss (2005) concludes that the states role in regulatory activism and setting new rules for markets has increased. This role is focused on national authorities to implement rules within competition policy or prudential norms in financial institutions and has meant an increase in the creation of new structures of governance to implement and apply rules (Weiss 2005, p.192). 3.1.4 Neoliberalism in a globalization context Kotz (2002) puts neoliberalism in a context of globalization and argues that the relation between state and transnational corporations (TNCs) has been altered; in turn, this has changed TNCs from being supporters to opponents against an interventionist state. One main reason for this change is the fact that TNCs are less tied to domestic markets and move towards competing on a worldwide market. This has created an environment where TNCs work towards lifting their regulatory constraints and seek to reduce their tax burden (Kotz 2002, p.75). The phenomenon explained by Kotz (2002) is further developed by Larner (2003) who claims that neoliberalism has usurped globalization as the form of explaining contemporary forms of economic restructuring. Larner (2003) calls the phenomenon “neoliberal globalization” where neoliberalism explains the process of opening national economies to global actors such as TNCs and global institutions (for instance, the IMF or The World Bank). The concept is however not seen from different scales, but rather as one global force that drives the thoughts of privatization, marketization and deregulation forward (Larner 2003, p.509). 3.1.5 The variegation and scales of neoliberalism Neoliberalism is a broad term that can be seen, and applied in different perspectives and contexts. According to Peck & Tickell (2002) neoliberalism is variegated by its character, which can be proven by its difference in practices between countries (Peck & Tickell 2002, pp.387-388) neoliberalism works both as an “out there” and “in here” phenomenon with effects that are both uneven and variegated. Much alike the globalization debate Peck & Tickell (2002) considers that neoliberalization should be understood as a process and not as an end-state (Peck & Tickell 2002, p.383). In order to perform analysis on neoliberalism Peck & Tickell (2002) argues that one form should be to focus on the change and shift in systems and logics and dominant patterns of restructuring. By using this analytical approach one can further see neoliberalization as a process and highlight the contingencies that it creates (Peck & Tickell, 2002 p.383) which, in this case can be connected to Uber and the thought of new sharing platforms as a result of an increase in neoliberalization processes. One argument regarding the variegation of neoliberalism is the fact that there exist different scales and scopes of state intervention and capital and labour regulation forms (Peck & Tickell 2002, p.387-388; Christopherson 2002, p.2). The process of neoliberalization often moves downwards along the vector of global-to-national. In turn, this gives national, regional and local state apparatuses a strategic role as actors who drive neoliberalization of institutional reforms and policy prototypes (Peck & Tickell 2002, p.387-388). This process has created different platforms where experiments on market-orientated regulations are

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initiated, consolidated and extended (Brenner, Peck & Theodore 2010, p.196) while simultaneously reworking the geoinstitutional frameworks, which has led to an emergence of regulatory projects in both market disciplines and market-constraints (Brenner, Peck & Theodore 2010, p.185).

3.2. Institutional theory

3.2.1 Risk, uncertainty and institutions In neoclassical economics there are assumptions about actors having complete knowledge in the cases of means to end relationships. This knowledge further decides how actors base their actions in order to optimize their utility. However, the notion that actors do not act under complete information has been discussed since the late 20th century; this has resulted in new problems, dealing with market outcomes where economic institutions have become rational responses to situations where economic actors do not have complete information (Beckert 1996 p.806). Institutions can be referred to as shared rules that can either include laws or collective understandings that are being held in place by norms, customs and explicit or tacit agreement. In turn institutions enable actors within markets to organize themselves, to compete and cooperate and to exchange (Fligstein 1996, p.685). From a market-theoretical perspective Knight (1985) states two terms: risk and uncertainty. While risk is referred to as the uncertainty in finding the optimal outcome when dealing with unfavourable contingencies, uncertainty is seen as the potential outcomes. This refers to the fact that while dealing with economic activity there are different results: the “risk” that is seen as a potential loss and “uncertainty” as the unpredictability in different outcomes (Knight 1985, p.233). Thus, one argument for states and governments to implement institutions is to reduce and manage risks and uncertainties that exist within the market economy (Beckert 1996, p.806). However there is a dichotomy between implementation of institutions and free markets. Friedman (1962) advocates that state interference often create inefficient outcomes within the market economy. The argument builds upon the fact that we live in a dynamic society where conditions constantly change, the implementation of government regulations in order to remove market imperfections create environments and conditions were the most efficient outcomes are inhibited (Friedman 1962, p.28). 3.2.2 Different institutional concepts The institutional tradition focuses on the fact that practices within the economy is understood, based and constrained by different institutions that govern individual behaviour (Gertler 2010, p.3). However, according to Gertler (2010; Martin 2011) the characterization of these institutions can differ, while Vebler (1919) calls institutions “settled habits” Douglass North (1991) calls institutions “the rules of the game in society” which can connected to the themes of institutional environment and institutional arrangements (Martin 2001, p.80-81). From an economic geography/political economy perspective Gertler (2010) argues that: “institutions are formal regulations, legislations and economic systems as well as informal

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societal norms that regulate the behaviour of economic actors” Gertler (2010, pp. 7-8). These institutional rules affect a broad variety of actors, spanning from firms, managers and investors to education systems and labour markets. Meanwhile, from a labour perspective Christopherson (2002) states that one of the main reasons for differences between labour practices is because of the different designs of labour market institutions within national economies (Christopherson 2002, p.2). Apart from the regulatory effect, institutions also produce and reproduce conventions, routines and habits which influences and constrains decision; however, the individual agency has many different approaches in applying to these institutional rules and the responses can vary depending on sector, region and nation-state (Gertler 2004, p.p. 7-8). However, institutions differ depending on the different analytical criteria’s, something that becomes clearer when inspecting nations differences in the cases of: scale and scope of state intervention, forms of capital and labour market regulation, the constitutions of institutions of social regulations, patterns of political resistance and political incorporation etcetera (Peck & Tickell 2002, pp.387-388). 3.2.3 New institutionalism in Economic Geography During the 1990’s the institutional perspective gained a prominent ground within the field of economic geography. This perspective builds on the thoughts that in order to fully understand the form and evolution of the economic landscape one must take into consideration the social institutions that economic activity is dependent on and how the economy is shaped by it (Martin 2001, p.77). Amin (2001) also acknowledges an increase of institutionalism within the field of economic geography. One key difference that divides institutionalism from e.g. Marxism or neoclassical economics is that institutionalism is not one canonical theory with strong specifications of economic laws; instead institutionalism is based on a core of converging definitions of what counts as economic, how it organizes in different contexts and possible ways to examine it (Amin 2001, p.1237). Meanwhile, Gertler (2010) considers that there has been an abundance of geography within the topic of economic geography from an institutional perspective. Gertler (2010) states that the processes where institutions are produced and reproduced are an ongoing process on many different spatial levels. This means that different spatial scales that range from local- to national- to global scales variegate institutions; therefore it is important to analyze how institutions shape and constrain economic actions within these different scales (Gertler 2010, p.6). According to Martin (2001) the emergence of institutional economic geography has also created several key themes, for instance: institutional environment (that focuses on systems of informal conventions, customs, norms and culture) the evolution of different economic landscapes or the role of technological innovation in shaping and changing regional and local economies (Martin 2001, pp.79-80). Another key term is institutional arrangements which denotes from the different organizational forms e.g. firms, labour unions, markets, regulatory agencies and the welfare state; which can be seen as an effect and who operates,

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is governed and structured by the institutional environment (Martin 2001, p.80). The main focus of institutional arrangements theme is to distinguish how economic and political organizations not only reproduce but also reshape the institutional environment. From the perspective of the economic geography field this raises important questions in how these changes vary across spaces and how it shapes local economic outcomes (Martin 2001, p.80). Fligstein (1996) calls this idea “markets as politics” which can be derived from the fact that modern states with capitalist economies are the creators of institutional conditions that create market stability. According to Fligstein (1996) the state plays an important role by constructing market institutions, which is mostly depending on the fact that within the modern capitalist society, the state’s organizations, groups and institutions make and enforce the rules that governs the economic interactions within given geographical areas. However the importance and result of these state interventions in the market economy is dependent on context on the states capacity of intervening, the nature of the intervention and the state's institutional history (Fligstein 1996, p.660).

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4. Background

4.1 Uber Uber was founded in 2009 (Kokalitcheva, 2016) and is based on a peer-to-peer sharing application that works as an intermediate in connecting private taxi drivers with passengers. One key difference between the traditional transport sector and the technological platform is the Uber applications applicability on different geographical areas and on a global level; independent on the given institutional and regulatory landscape within these areas. Where the only underlying resources for carrying out the service is an internet connection, the application on a mobile device and Uber operating within the region3. This is formulated by Uber on their official website in following sentences:

“Whether it’s a ride, a sandwich, or a package, we use technology to give people what they want, when they want it” and “Across borders, cultures, and languages, we’re proud to connect people who need a reliable ride with people looking to earn money driving their car.” (Uber, Our Story, 2017).

From the passenger's perspective the transaction works by ordering via the Uber application, where all information regarding waiting times, size and prices are available; the transport is debited directly to your registered credit card (Uber, How Uber works). From the driver's perspective the requirements includes possessing a vehicle, an online registration of your driving license and an approval from Uber, after these steps all necessary information for the driver will be available in their Uber application4 (Uber, Drive). The services that Uber supplies can be divided into four different categories: economy, premium, accessibility and carpooling. The economy services are low cost options that include UberX, UberXL and Uberselect. The premium services are luxury rides that include UberBLACK, UberLUX and UberSUV. In contrast to the premium and economy services the accessibility service provides an option for the consumer to order a cab that is wheelchair accessible and the carpooling service UberPOOL supplies an option for passengers to share their Uber ride with other passengers heading the same way (Uber, Ride with Uber). Five and a half years after the foundation of Uber the company provided their billionth service, on the 30th of December 2015. (Uber newsroom, 2015). By the end of October 2016 the company had more than 40 million monthly active riders worldwide (Kokalitcheva, 2016) and an estimated private valuation of 68 billion us dollars (Konrad 2016). However, behind Uber’s success there is a clear division between the receptions of the Uber platform; while the amount of users and revenues has increased, Uber has also been the subject of an increasing amount of lawsuits; since 2009 adding up to more than 70 pending federal

3 Money should also be seen as a given variable in this case. But is assumed to be self-evident when ordering a service of this kind. 4 It is important to stress that the online registration can differ depending on regional regulations, as stated by uber in: www.uber.com/sv-SE/drive

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lawsuits in the U.S. alone5 (Kelly 2016). Meanwhile in Sweden, Uber has been the subject to similar experiences. In May 2016, the Uberpop service was shut down in Sweden and over 40 drivers have been fined because of providing taxi services without a taxi driver's license and that the services was not compatible with Swedish legislation (Carlsson 2016). According to Uber their services provides a variety of positive effects on the surrounding environment. The economic argument is based upon the fact that citizens within cities where Uber operates can earn money in a new and flexible way. From an American perspective over 50 per cent of Uber’s drivers work less than 10 hours a week, which enables parents, students and retirees to earn extra money depending on their own schedule and time. In regard to occupation and growth in local economies London is given as an empirical example. Where one third of Uber’s employed drivers live in neighbourhoods with the highest unemployment rates (Uber, Helping Cities 2017).

In the case of availability and security Uber states two arguments. Firstly Uber allows an increase in availability, providing services in areas where there is a lack of bus and train stations and neighbourhoods where regular taxi cars do not drive. Uber’s goal is to “Provide safe travels to an acceptable price around the clock - regardless of where you live, where you’re heading and how you look”. According to reports carried out by Uber, their services also contribute to safer roads, stating that since the UberX launch in California July 2012 there has been an estimated 6.5 per cent decrease of collisions caused by DUI’s per month within the region. In the Seattle area there are similar trends, where Uber’s reports point towards a ten per cent reduction in arrests of drunk drivers (Uber, Helping Cities 2017). Sustainability arguments are by Uber mainly formulated through the UberPOOL service, which is a carpool service that enables an Uber passenger to share their drive with other passengers and thus sharing the price of the cab drive (Uber, Uberpool 2017). A study which was conducted in San Francisco (one of cities where Uber has the most traffic and over 25 per cent of the services are UberPOOL trips) demonstrated that during one month Uberpool passengers saved 647 000 English miles which corresponds to 27 laps around the earth. In sustainability terms the UberPOOL service enables a reduction in both fuel consumption and reduced carbon pollution (Uber, Helping Cities 2017). 4.2 Previous research regarding Uber, the sharing economy, policies and regulations Regarding both Uber and the sharing economy there exists research that intends to highlight the potential conflicts and problems that might arise from a regulatory and policy perspective. Given the notion that the sharing economy is a rather new phenomenon, much research that aims to investigate the regulative responses has only been published during recent years, where information regarding a Swedish context is scarce. Furthermore it is also important to state that most regular research reports treats the sharing economy as a broad phenomenon; rather than focusing on one specific company that operates within the sharing

5 The increased amount of lawsuits against uber are not uniqie for the U.S. and has occurred in many different countries, including sweden.

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economy. Bearing the previous statements in mind it is furthermore important to state that much of the previous research within this field apply to different institutional settings, where much of the research clarifies the conflict that arises between Uber6 and governments, authorities, legislators and incumbents. From the neoliberal perspective the literature is thin, where some scholars have used the neoliberal approach to further investigate the effect of peer-to-peer sharing models and regulatory answers. According to Rauch & Schleicher (2015) sharing firms, unlike previous start-up booms have seldom been in conflict with large technology firms or regulators. Instead the biggest problem facing these sharing firms come from city and state politics, where locally regulated competitors have fought against the sharing newcomers. In the case of the taxi industry claims against Uber are based on arguments which states that ridesharing firms use an unfair advantage since they do not need to purchase taxi medallions or apply to consumer and pricing regulations (Rauch & Schleicher 2015, p.2). Another argument against the sharing economy is the statement that companies who operate within this sector thrive on tax arbitrage. According to Malhotra & Van Alstyne (2014) the authors state that one way of solving this issue is by supporting sharing economies. An empirical example is taken from Amsterdam, where operators for sharing economy companies are obliged to pay income and tourist tax7 in order to help fund service of public goods. However, one of the major complications regarding the sharing economic platforms are to find a regulatory compromise between traditional companies and companies who operate within the sharing economy. In order to even the regulatory field and see to that both parts contribute to society, by tax incomes and fair agreements for employees. The authors also state that it is important to overlook the regulatory landscape to distinguish what regulatory and policy forms that are necessary and what forms inhibit growth and economic transactions (Malhotra & Van Alstyne 2014, p.29). The statements formulated by Malhotra & Van Alstyne (2014) are closely aligned with Ranchordás (2015). Who states that the sharing platform poses a number of challenges. One problem area is the discussion of how regulators can find a balance between advancements in technological innovation and the need to protect public safety and health, and customers who are victims of liability and fraud. Many of the decisions against the sharing economy have been based upon prohibition where certain sharing economy practices such as Uber have been prohibited in cities. One of the problems that Ranchordás addresses is the fact that the sharing practices are often innovative which make them more difficult to regulate. In addition they also operate within a border between personal and commercial activities that further creates problems and complexities for legislators and politicians (Ranchordás 2015, pp.474-475). By discussing the regulatory responses towards sharing economy, Koopman, Mitchell & Thierer (2015) claim that one of the main reasons behind economic regulation is that they are implemented in order to protect consumer welfare (Koopman, Mitchell & Thierer 2015,

6 And other companies that operate within the Sharing Economy. 7 Depending on what sector within the Sharing Economy that they operate within

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p.532). The author’s description of the sharing economy and consumer protection show that even though regulations are applied in order to protect consumers, regulation does not automatically mean that they accomplish the goals and results that are intended. Koopman, Mitchell & Thierer (2015) also points towards the fact that evidence shows that many traditional consumer protection regulations hurt consumer welfare. In these cases competition, markets, rating systems, and ongoing innovation are often better at solving problems than regulations; while given a chance to do so (Koopman, Mitchell & Thierer 2015, p.545). This discussion is further formulated by Malhotra & Van Alstyne (2014) who argue that sharing platforms can be better than governments in performing screening processes. Since sharing platforms are closer to their members, they have a stronger incentive to look after their community, because that’s where they earn their money (Malhotra & Van Alstyne 2014, p.29). Meanwhile, Miller (2015) states that one of the major problems with creating a clear regulatory response towards the sharing economy is based upon the sharing economy’s rapid changes. This creates a complicated role for legislators, since they have to find regulations that settle a problem that arises between individuals desires to engage in the sharing economy and corporate interests within the sharing economy. Different attitudes towards the sharing economy will also be more complicated to distinguish as the development and sharing economy increases, where Miller (2015) argues that personal interests and corporate profits will have an effect on the nature of regulations, but the process is still ambiguous and hard to predict (Miller 2015, pp.200-202). According to Ruach & Schleicher (2015) the resistance against the new sharing firms has led to different regulatory outcomes. In some cases anti-sharing lobbying has led to regulations that has barred sharing firms from entering certain markets or forced them to change their practices (Rauch & Schleicher 2015, p.3). The author’s main discussion regards the debate of how local governments can apply to the sharing economy if this trend holds on. This means that local governments will either have to collaborate in order to find sustainable agreements in terms of regulations and policies; while simultaneously providing functional market conditions for preexisting firms that operate within similar sectors. In turn this could create an environment where sharing firms are active participants in economic redistribution and providing city services; services that sharing firms to some extent evade from today, and are due to an increased criticism (Rauch & Schleicher 2015, pp.3-4). Rauch and Schleicher (2015) conclude that today’s sharing economy is subject to an increased conflict against established firms. However, in the future sharing firms might need to rethink their relationship with the governments that regulate them. This would create a situation where both sharing firms and cities will have to reevaluate their approaches towards local regulations. According to the author’s it is important that city governments who approach sharing regulation considers what they want from these firms. In both political and financial cases there are limits to what the costs could impose, which could converge from today's strategies of consumer protection and protectionism for the incumbents within traditional business sectors. In contrast the sharing firms might have to seek towards finding new options, becoming less oppositional towards local governments and to seek rents and

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contracts through lobbying and bidding, rather than exclusively engaging in defense against local regulations (Rauch & Schleicher 2015, p.60). In conjunction with Rauch & Schleicher (2015), Dyal-Chand (2015) states that regulating the sharing economy is inevitable, but the problem lies in the present conversation; that is mostly based upon the traditional discussion regarding markets, firms, ownership and competition. According to the authors, another perspective of seeing the regulatory responses is to see the sharing economy as an alternative form of capitalist system where regulators should find a fit between protecting market participants and allowing different forms of capitalism flourish (Dyal-Chand 2015, pp.308-309). This goes in similarity with the arguments formulated by Jonas (2016) who states that the existing industry regulations do not neatly fit with the Uber models. Where one solution would be to create specific laws towards the sharing economy that could apply to the problems that are be addressed within the sector (Jonas 2016, p.239). From a neoliberal perspective Martin (2016) argues that the sharing economy is framed in two contradictory ways; which ranges from a potential pathway for a more sustainable society, to a “nightmarish” form of neoliberalism (Martin 2016, p.149). From a sustainability perspective Martin (2016) states that the sharing economy, is an economic opportunity, a more sustainable form of consumption and possibly a pathway to a decentralized, equitable and sustainable economy. Meanwhile, Martin (2016) also states that the sharing economy is reinforcing the neoliberal paradigm, by creating unregulated marketplaces and incoherent forms of innovation (Martin 2016, p158). From a labour perspective Cockayne (2016) also states that the sharing economy has created a new perspective towards labour. According to Cockayne (2016) the proponents of sharing platforms attempts to treat labour as a constantly available and cheap commodity with a disinterest towards labour; which is in continuity and aligned with the normalization of flexible labour that occurred in the U.S in the 1970’s. Cockayne (2016) also states that this change in social meanings and constructive feelings is a symptom of the neoliberal capitalism which has in combination with sharing platforms increased the production of new labour rights ideals (Cockayne 2016, p.80).

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5. Conflicts, attitudes and regulatory responses towards Uber in the U.S. and Sweden

5.1 The taxi-driving sector in the U.S. and Sweden In large parts of the world the taxi industry is highly regulated. Where legislators often use taxi licenses in order to limit the amount of taxi vehicles within a specific area, consequently in areas that are highly attractive these licenses can be of high demand (Taxiförbundet 2016). The attractiveness of taxi licenses can be highlighted by the high prices of taxi medallions8 in New York City during the 21st century, where prices in 2011 amounted to $1 million per license (Salmon 2011). In turn this has created situations of shortages in supply of taxi vehicles in different geographical areas have (Taxiförbundet 2016). Meanwhile, in contrast to the U.S the Swedish taxi market has been deregulated since 1990, which means that authorities cannot set a limit to how many taxi cars that are allowed to operate in different areas (Taxiförbundet 2016). However the authorities still has demands, that in order to operate a taxi vehicle the operator must have a license for taxi traffic and taxi driver’s license in order to become a taxi driver (Taxiförbundet 2016). As we will see in following paragraphs, Uber has created a variety of regulative responses and can be seen from many different perspectives, sparking a broad difference between attitudes and reception. While the platform and business model that Uber is based upon differs from the regular taxi industry it still builds upon a standard transaction of connecting drivers and passengers; however Uber uses technology as an advantage. In order to further nuance the debate the next paragraph will formulate Uber’s own arguments to their service, which advocates their impact towards the economy, sustainability and security. Furtheron this chapter will focus on the empirical data that has been found in regard to the nations, regions and cities of analysis. 5.2 Regulations and market coordination forms regarding the traditional taxi industry in the U.S. and Uber. In the early 20th century motorcars became a widespread phenomenon that led to the starting point of a progressive era. Progressive politicians in the U.S. believed that economic competition was unnecessary and instead supported a greater regulation of business. From a municipal level this led to various progressive reforms within the taxi industry, including price fixing, limiting the amount of taxi cars, mandating how fares are collected, and dictating the hours of operation. In many American cities drivers were also required to display medallions, in order to signal that they were allowed to operate within that market (Sobczak 2016, p.1). According to Rogers (2015) the main reason for the regulation of the taxi industry in the 1920s was a response towards the perceived free-for-all, where markets were flooded with taxis, which led to declining fares, long hours for drivers, dangerous cars and inadequate compensation for accident victims. The regulations that were imposed by US cities can be understood as a bargain with the operators, which restricted market entry and regulated fares in order to create an environment where cab drivers could make a living; 8 In the case of New York medallions are synonymous with a taxi license

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however, in exchange operators had to follow certain safety, insurance and service requirements (Rogers 2015, p.87). During the 1970’s and 1980’s the U.S congress took steps towards deregulating the taxi industry. These steps were taken during a time period where ideological movements considered regulations as a cause of waste and inefficiency while denying consumers the range of price and service options that they desired. What makes the American market for taxis unique is that it went from being regulated to a deregulation period and back to regulation. According to Dempsey (1996) the cities that adopted partial or total deregulations during the 1970’s and 1980’s experienced unsatisfactory results, which resulted in nearly every city that embraced these principles later resumed economic regulation towards the taxi sector (Dempsey 1996, p.75). Much of the reason behind the reimplementation of regulations towards the taxi sector was based on the failure of the deregulations in providing a reduction in taxi prices, improvement in customer satisfaction and not succeeding in increasing supply of cab services within geographical areas where supply was insufficient (Dempsey 1996, p.114-115). Sobczak (2016) states that depending on the different levels of taxi regulations imposed by states, regulations have generated higher prices that ensured the profitability of the taxi companies and led to a black market for medallions. Since taxis that operate without medallions were illegal and the total amount of taxis within the market was capped, regulations led to an artificially lowered supply that in turn led to a raised cost of medallions. These progressive laws remain in many American cities, which has led to an increase in the prices of taxi medallions. This has previously been exemplified in the case of New York City in 2011, where costs amounted to $1 million. Meanwhile the price for a medallion in Boston, Massachusetts amounted to $400 000 in 2016. These high prices have deterred entrance to the taxi market, where few of the startup companies can afford to purchase six-figure medallions. However, with the emergence of companies such as Uber the development within the taxi market has changed (Sobczak 2016, p.1). According to Rogers (2015) there are two fundamental changes that Uber has imposed within the taxi sector. Firstly the elimination of different types of transaction costs that has troubled the sector, in particular the search costs. Thereby the Uber platform has created something that closely aligns to a free market for car-hire services. Secondly the Uber platform has encouraged vertical and horizontal integration of the sector, which is highly fragmented in many cities. (Rogers 2015, p.86). From a contemporary perspective the ideological thoughts that descends from the progressive era are still common on both a state and regional level. Because of the recent years increase in ridesharing activities e.g. Uber, states and municipalities in the U.S have attempted to either increase the regulations or ban these operations. According to Bakst & Tyrrel (2017) this conflict is mostly based on the traditional taxicab companies. From a historical perspective these companies have had an effective monopoly on for-hire transportation. In combination with the underlying laws, which includes obtaining a taxi

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license or medallion has resulted in a cap of total amount of medallions. In turn there has been an increased complexity for competitors to enter the taxi markets and challenge the incumbent firms. This complexity has created a situation where there is no competitive pressure towards the prices, resulting in consumers paying above-market fares. However, with increase of Uber and other ridesharing platforms these underlying regulatory frameworks have been contested (Bakst & Tyrrel 2017). According to Bakst & Tyrrel (2017) government policies play an increased role in the American taxi market. Policies that aim to preserve the traditional taxi market system works against the new forms of sharing, which thrive through their competitiveness. By imposing costly or burdensome regulation on sharing firms the authors claim that the ones who pay for these expenses are both the drivers and consumers, with a particular impact on the poor. Since Uber services are generally cheaper than taxis, this results in significant savings for consumers (Bakst & Tyrrel 2017). Meanwhile, in American context, Uber and other similar sharing platforms distinguish from the traditional taxi industry. Typically, because the traditional taxi service, riders have to hail a cab on the street or wait at a designated passenger pick-up location, meaning that the next available taxicab is required to pick them up, regardless of the passenger’s destination. After the pick up the taxi drivers’ taximeter will charge the passenger this price is based on the fixed rate by city regulators and the distance or duration of the trip (Sobczak 2016, pp.1-2). One problem with the traditional service is the question regarding the efficiency of connecting passengers with taxi drivers. This can, according to Rogers (2016) be connected to a recurring problem within the American taxi industry, the high search costs. The effect of high search costs can lead to informational problems within the sector. First, if consumers have difficulty in finding a cab service because of a scarce supply, they might tend to not search in the first place. Second, high search costs for phone-dispatched cabs can create an environment where riders get tired of waiting and instead hails a cab on the street; in conjunction this can also be the case for driver’s, who might hail a rider on the street, presuming that the client who called for a cab might have already found a fare from the street. In some cities these types of behaviour while ordering cab rides have created a climate where many dispatched cabs never arrive, since both drivers and passengers can change their behaviour based on uncertainty (Rogers 2016, p.88). In contrast Uber has eradicated search costs, since the service is not built upon a dispatcher where passengers have to wait or stand on the street, passengers can instead follow the cab’s progress via the application. In contrast to the traditional taxi service drivers and passengers cannot poach one another’s pro-committed fares and the information regarding the cab is much more transparent. Which in turn has created a market situation that previously has been seen as impossible: a functioning market for car-hire services that is mostly governed on supply and demand (Rogers 2016, pp.88-89). 5.3 Regulations and market coordination forms regarding the traditional Swedish taxi industry and Uber The requirements for a taxi-driving permission is in Sweden carried out by Transportstyrelsen (the Swedish board of transporting) who apply to Swedish law, the taxi

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traffic law (SFS 2012:211) and the taxi traffic enactment (SFS 2012:238). In order to provide taxi services Transportstyrelsen base their decision on three factors. First, the service provider must take a written exam that tests the applicant's proficiency. Furthermore the applicant has to have necessary economic resources, which includes a capital and reserve of at least 100 000 Swedish kronor; if the applicant aims to have more than one vehicle an additional fee of 50 000 Swedish kronor is added for every additional vehicle. The last factor that Transportstyrelsen takes into consideration is the applicant's reputation, which is tested towards criminal records, traffic registry and that the applicant has not been in personal bankruptcy or associated with a company that has been in bankruptcy) during the last five years (Transportstyrelsen, Krav för att få trafiktillstånd). Since the first of January 2015 it is also mandatory for taxi service providers to give a binding price information before the trip is being conducted, which is based on unit pricing regarding the price for a trip of 10 kilometers, exceeding fifteen minutes and 500 Swedish kronor, Meanwhile in 2017 two laws will enter into force, both laws are applied to the law on account central's for taxi traffic (2014:1020) while the enactment is applied to enactment (2016:623). The first law and enactment entered into legal force the first of January, which states that an accounting center is obliged to collect, store and hand out information that is being transferred through taximeters. The second law enters legal force in the first of May, the law makes taxi companies obliged to transfer their taximeter information to the accounting centers; which in turn hands the information over to the Swedish tax office. The aim of these two laws is to improve the Swedish tax offices possibilities to conduct tax control on the taxi industry (SOU 2016:86 p.110). From the Swedish state's perspective, the Swedish Ministry of trade and industry has also conducted a public investigation (SOU 2016:86) which aims to investigate taxi and carpooling and the possibility for adaption towards the new conditions within the taxi and driving industry. The extent of this report treats a broad spectrum of factors that affects the taxi and carpooling industry in both a historical, contemporary and future context. Including propositions in changes in enactments, underlying regulative frameworks, possible regulative responses and adaptations towards the taxi industry in Sweden and the institutional landscape that companies have to adapt to while providing services within the sector. The report highlights two recurring topics within the Swedish taxi industry, the regulatory framework that comprises the taxi industry and taxation. As will be pointed out in the following chapter, one of the main arguments against Uber’s UberPOP service was the lack of taximeters; in response to Swedish regulations all other Uber services9 are equipped with a taximeter in order to follow Swedish legislation. Regarding taximeters, it is stated in (SOU 2016:86, 167) that the taximeters functions as an important equipment in order to calculate the price of the trip and printing out receipts that provides the taxi company with support for invoicing and accounting. The taximeter is also an important tool in order to provide 9 UberBLACK, UberX and UberLUX

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authorities with information for tax control of the business. According to the report these instruments will also be further enforced when the law regarding accounting centers10 will be enforced in May 2017 (SOU 2016:86 167). As previously mentioned, another topic regarding the Swedish taxi industry is the case of taxation rules. While performing a taxi service there is a multitude of set rules of income taxation that must be taken into consideration. Income, in this specific case is also defined as the revenue that is accumulated through business activity, which has been conducted professionally or independently (SOU 2016:86 175); accordingly these set of rules are applicable to both traditional taxi firms and Uber services. In Sweden, any service provider who employs a taxi driver is obliged to pay F-tax. This taxation form is issued by the Swedish tax office to the service provider who conducts the business and the service provider is obliged to make tax deductions, pay social fees and hand control information to the tax office. In the case of taxation towards taxi drivers’ incomes there are different rules depending on the extent and form of the service that is provided. All income that is compensated through salary is in Sweden defined as an income of service that is taxable. However, if one carries out services as a hobby activity there are specific rules in terms of tax deductions (SOU 2016:86 176-177). Apart from service providers F-tax and taxi drivers income taxation there are other tax regulative forms that have to be taken into consideration. The employer has to make a deduction of the preliminary tax, which needs to be in close proximity to the final tax payment. At the same time, the payee of income salary must also hand over control information to the Swedish tax office. The control information is aimed to serve as a basis for the amount of taxation that should be levied, if the compensation does not refer to the entire year of salary the payee must provide the value of the income based on the amount of time spent. The employer must also pay a general payroll tax based on the employee's income (SOU 2016:86 177). In the case of sharing platforms, there are further complication towards what tax levels the service provider should pay. The Swedish tax office has concluded that these business performers are obliged to pay tax on their income while their employer is obliged to pay social fees and provide control information, However, if the employer is based abroad they are not obliged to perform preliminary tax deductions (SOU 2016:86 178-179). In cases that treat both taxation and working conditions Uber has also been the subject of criticism from the Swedish taxi drivers association (Taxiförbundet). In a report released by Taxiförbundet (2016), Peter Norman, chairman of the Swedish taxi drivers association and Claudo Skubla, director of the Swedish taxi drivers association, claim that the reason for UberPOP’s cheap relative prices are not dependent on technology or the sharing economy but the fact that Uber avoids paying taxes (Taxiförbundet 2016, p.4). The authors claim that the main differences between the traditional taxi services is mostly dependent on Uber not demanding a taxi driver's license, taxi permissions and that the vehicles that are being used are not inspected and allowed as taxi vehicles. Meanwhile Norman & Skubla argue that the reason for UberPOP being between 40 to 60 per cent cheaper than traditional taxi services 10 According to law (2014:1020)

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are based on the fact that Uber uses a set price for the UberPOP service. In turn drivers would not earn any money providing the service if they would pay the determined charges, which includes: input costs, withholding tax11, value-added-tax and employer payroll tax. Since the tax responsibility is put on the drivers the Swedish taxi driver’s association claim that this creates an environment where tax evasion is the only way to earn money while providing the UberPOP service (Taxiförbundet 2016, p.4). However, in the court rule against UberPOP Svea Hovrätt stated that their reason behind the rule against UberPOP drivers was not subject to the payment levels. Instead Svea Hovrätt states that the reasons behind the judgement against UberPOP was based on the service that was provide is illegal taxi traffic and a crime against the taxi traffic law (SOU 2016:86 p.153). From Uber’s perspective the taxation debate has created adaptation in terms of collaborative responses with the Swedish tax offices. In July 2016, Uber Sweden’s of that time CEO, Alok Alström announced that new technological solutions similar to the platform that Uber uses will help Uber’s drivers to report obligatory and necessary information to the Swedish tax offices. In Alströms debate article in Dagens Nyheter, Alström points out that Uber is very popular among both drivers and passengers, while the main criticism has come from the major taxi companies and their lobby organizations. The claims that Uber drivers evade tax obligations and that the Uber platform is not built upon an improved user experience and business model, is according to Alström not a description that Uber shares. Meanwhile Uber has also adapted to the regulative forms of requirements within the taxi sector where all UberX, UberBLACK and UberLUX cars are now registered taxi cars and equipped with taximeters and taxi driver’s license (Alström 2016). Alström states that Uber is engaged in helping their partner drivers to fulfill their tax obligations, where the Uber platform supplies their drivers with business- and trip data over all completed services. In combination with these solutions Uber also launched a new function within their application that allowed partner drivers to the function to allow Uber to directly share necessary income records with the Swedish tax office (Alström 2016). 5.4 Legal cases and responses towards Uber in the U.S. In the case of the U.S. it is important to distinguish a difference between the U.S and Sweden. Since Uber was established in the U.S. six years ago the growth and establishment of the services provided by Uber has had a longer time to settle in the U.S; in comparison to Sweden. This means that there is a plenitude of legal cases and discussions that have had a longer time to spread in the U.S; while in Sweden the discussion is rather based on how to respond and act towards the increase in sharing economy activities such as Uber. In the outline of this chapter the focus will be on the legal cases and responses towards Uber in the U.S, on both a nation, state and city scale. As will be concluded in the upcoming chapters there is a clear difference between the legal landscapes of the countries of analysis, while the discussion of Uber in the U.S. is occurring on a national level, the states then play an important role as actors of implementing their own regulations; depending on their own regulatory and legal landscape. In contrast the regulatory discussions and conflicts in 11 A preliminary tax added to the employee’s gross earnings, paid to the swedish tax office

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Sweden are mostly based on national level; while a multilateral level (European Union) can both influence and in the future determine the regulatory outcomes. With the increase of driving platforms like Uber, competition in the U.S. has increased and the taxi industry has responded on multiple different fronts. Some taxi services have adapted to the technology and implemented their own application service which also includes direct credit card payments, vehicle tracking and advance ordering; but in comparison to Uber their rates do not vary depending on times or dates (Sobczak 2016, p.4). From a lobbying perspective certain taxi companies and associations are also using a legislative approach. Instead of competing against Uber they have lobbied lawmakers to enact different forms of legislations that would require Uber services to adapt to the same regulations that the taxi industry faces, or in some cases ban the sharing platform services entirely. In regard to national legislative responses towards Uber, the company has also faced resistance at the ballot box. One case in Austin, Texas, Uber was subject to local government’s requirements of their service providers to be fingerprinted. In one proposition the demand for fingerprints would be exempted for Uber. But during the election the voters voted against this exemption, where many voters agreed with the opponents claim that Uber was rejecting their passengers safety in order to favour corporate profits (Sobczak 2016, pp.4-5). According to Taylor (2016) the aggressive expansions of Uber is being obstructed by lawmakers, mainly because of safety concerns, pressure from traditional taxi companies or a desire to level the playing field for incumbents. In order to inhibit the rapid expansion of Uber lawmakers have implemented requirements on driving fingerprinting, vehicle inspection, insurances, fees, and limits on where drivers are allowed to pick up and drop off passengers. In 2016, 34 U.S. states and over 69 cities had passed legislation that governs ride-hailing companies (Taylor 2016). As mentioned in previous paragraph, regulatory responses towards Uber have also been introduced in many different states within the U.S. In these cases the outcome can differ depending on state legislation, settlements between Uber and the State and regulatory responses. In order to nuance the differences within the state's responses, a list of different state actions will be compiled; in order to distinguish the different cases and responses. It is also important to state that while the regulatory activities are phenomenon’s occurring on different government levels, this part will only include findings regarding distinctive cases on state and regional levels. Alaska: In 2015 Uber agreed on a settlement with the state of Alaska, agreeing to pay a fee of $77,925 and stop their operations in Alaska until they would comply with state law. The reason of Uber breaking the law was based upon Uber classifying their driver employees as independent contractors, which is contrary to the Alaska Worker’s Compensation Act. With these forms of misclassifications, Uber could avoid paying unemployment insurance, taxes and workers’ compensation premiums (Department of labor and workforce development, State of Alaska 2015). However, during March 2017 Alaskan lawmakers have started to

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consider legislation that would allow services like Uber to start operating across the state, this would be performed by exempting Uber drivers from being covered under the state’s workers’ compensation policy (Zak 2017). California: In 2015 a legislative bill was passed through the Charter-party Carriers Act that regulates transportation network companies to apply to insurance coverage while providing transport services. The bill also includes that transportation network companies will apply to this policy; hindering companies from putting the responsibility on their driver's (California legislative information, State of California 2014). Similar to the case of Alaska a court judge in California determined in 2015 that 160 000 former and current Uber drivers in the state should be treated as a class. The lawsuit alleged that Uber drivers were misclassified as independent contracts rather than employees which made it possible for Uber to bypass compensations and reimbursements that employees are entitled to under California law (Steinmetz 2015). During 2017 this legal case is still pending, where Uber is trying to find a settlement with their drivers based on the driver’s losses by not being entitled compensations and reimbursements in accordance to the employment laws in the state (Worland 2017). Colorado: In 2016 Colorado Governor John Hickenlooper signed into law making Colorado the first state to legislatively embrace Uber technologies. In conjunction with the signing of the bill Gov. John Hickenlooper stated following:

“…Colorado is once again in the vanguard in promoting innovation and competition while protecting consumers and public safety” and “rules designed to protect consumers should not burden businesses with unnecessary red tape or stifle competition by creating barriers to entry...”

While the approach from the state of Colorado is very open minded towards ride-hailing services there are some light regulations that have been implemented. Uber are obliged to obtain a $1 million dollar liability insurance from the public utilities commission in Colorado and their drivers are obliged to carry a primary insurance coverage when a driver is soliciting fares (Vuong 2014). Illinois: in the state of Illinois there has been an implementation of a statewide legislation in order to regulate drive-hailing companies. This act includes that drive-hailing is obliged to comply with automobile liability insurance requirements, from the moment driver logs on to the drive hailing companies’ digital platform. The responsibility of these insurances are assigned to the companies that provides the service, and obliged to provide coverage in the event of participating driver is subject to an incident without having full coverage (Illinois general assembly). However, even though state law has been enacted in order to govern drive-hailing companies, Chicago, the third largest market in the U.S. governs their transportation locally. This puts Uber in a peculiar position where debates between proponents and opponents of the Uber platform have been an ongoing discussion (Taylor 2016). In 2014 a council city ordinance decided that Uber and traditional cab services are

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not the same business models, which resulted in Uber being able to operate in Chicago without taxi medallions, city regulated fares, fingerprinting and other standards that traditional cab companies are obliged to apply to (Spielman 2017). In 2016 it was concluded that the question regarding fingerprinting drivers would be investigated during a six-month period, a rule that according to Uber officials is an inefficient burden that likely would force them to stop their operations in Chicago. Apart from fingerprinting the local ordinance policy that was applied includes a one year play for drive hailing companies to implement a plan to offer handicapped accessible rides, ride-sharing drivers will get a special chauffeur license which is specialized for their specific industry and their training requirements can be handled online instead of attending classes like ordinary cab drivers are obliged to. The ordinance also eliminates the requirements for public chauffeur license applicants to undergo upfront drug test and physical exam, where the city’s license commissioner instead will seek those for specific drivers when people have complained (Byrne 2016). Massachusetts: in august 2016 governor Charlie Baker signed the legislation: An act regulating transportation network companies. Which included support for transparent pricing, properly marked and inspected vehicles, clear insurance standards, authorization in order to operate in specific areas and the strongest state requirements regarding background checks in the U.S. The legislation also includes insurance coverage towards drive hailing companies, which forces the companies to guarantee insurance coverage as soon as a driver accepts a request for a ride (Press release, State of Massachusetts 2016). Nevada: In 2014 Nevada became the first state to shut down Uber services when a district judge issued a preliminary injunction that prevented Uber from operating on a statewide level. This injunction was implemented one month after Uber had released their services in the state; where the Nevada Taxicab Authority and the Nevada transportation Authority quickly fought back in court which lead to injunctions that allowed police agencies to seek and arrest Uber drivers and impound their vehicles (Gould 2014). One year later, In July 2015 Uber could once again operate in Nevada after state legislators passed a law allowing drive-hailing companies to operate within the state. The underlying case that the decision was based upon included lobbyist from both Uber and the traditional taxi industry. Uber’s proponents argued for technological innovation and a popular demand for Uber in the state of Nevada; in contrast the opponents from the traditional taxi industry argued for safety and traditional taxi regulations. One of the major solutions for finding an agreement of the new deal was based upon a 3 per cent excise tax which includes both the drive hailing companies and the traditional taxi companies, and projects to bring in $19 million in tax revenues for public goods (Lien 2015). New York: On the 6th of February 2017 the New York state senate passed a comprehensive bill that aims to bring ride-sharing to upstate communities and improve local economies within the state. According to Senator James L. Seward, the goal with this legislation is to

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allow Uber and other ride-sharing companies to begin operating outside of New York City. Seward states that the bill will lead to “economic, environmental, and public safety benefits” (Seward 2017). In order to make these services more attractive there are two changes within the taxation towards ride-sharing services outside of New York City. Firstly tax costs are cut to two per cent for passengers and secondly the services will not be subject four per cent state sales tax will. In turn, Senator Seward states that all revenues for these services will directly go to infrastructure improvements for roads, bridges and county transit needs. In order to protect both drivers and consumers the Uber services will also have to apply to a regulatory framework which requires: criminal and driving history background checks, passenger notifications of driver information and trip charges in combination with a non-discrimination and a zero tolerance policy towards drugs and alcohol (Seward 2017). Texas: as mentioned earlier, Uber faced opposition from the ballot box in the case of fingerprints for their drivers. Even though there existed a political support in order to make exceptions regarding fingerprinting Uber drivers, the voters in Austin voted against that exception which resulted in Uber pulling back their services in the region (Sobczak 2016, p.4). In conjunction with the regulations towards Uber in Austin, ten other cities within the state of Texas have passed ordinances in order to regulate drive-hailing companies between late 2014 and May 2016. The reason behind these ordinances are based upon disagreements between policies that include background checks, reporting requirements and vehicle restrictions (Transportation network companies, Texas A&M transportation Institute, p.15) Washington D.C: In 2012 bill 19-892 in the council of District of Columbia was passed, which sanctioned and regulates Uber and other drive-hailing companies. In the bill, D.C. legislators forces Uber and similar companies to comply with certain requirements, which includes the option to order a wheelchair-accessible car or se the estimated fare price. The commission also concludes that they can only assert power over drive hailing companies if it is found necessary in order to protect the safety of customers and drivers, consumer protection, or the collection of non-personal trip data information (Jeffries 2012). In 2014 steps were taken in order to further implement requirements for Uber and other drive hailing companies, which includes: a minimum age of 21 for drivers, successfully passing the criminal background check, sex offender background check and driving history check. The requirements also included a $1 million primary insurance coverage in case of accidents; from the time the driver picks up a passenger until drop off, registration with the D.C. Taxicab commission and yearly car inspections (Aratani 2014). 5.5 Legal cases and responses towards Uber in Sweden In Swedish context the debate and regulative responses against Uber involves many different institutional aspects. These different aspects have previously been discussed in the theory chapter, regarding the different forms of institutions, which can be divided into two

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different perspectives. Firstly through the regulatory institutional perspective, which comprises the regulatory landscape that companies within the transport sector must apply to. Secondly through the normative institutional attitudes, which includes the debate regarding tax revenues and working conditions and how they apply to the regulatory institutional framework in Sweden. 5.5.1 Uber’s operations in Sweden and the legal cases against UberPOP Today, Uber provides four different types of transport services within Sweden: UberX, UberBlack, UberXL and UberLUX. All of the services of who supply a different kind of transport depending on what price range and comfort the consumer is aiming for (Uber, 2017). Before the 23rd of March 2016 the services provided by Uber also included UberPOP, which was launched in September 2014 and served as a carpooling service. According to Uber, the UberPOP service aims to “securely and efficiently connects car owners with empty car seats with travelers looking for a safe and cheap trip”. Simultaneously Uber also argues that Uberpop affects the existing carpools and increases efficiency in car usage; in turn, connecting drivers and travelers together with a carpool decreases the amount of cars, reduces emissions, traffic jams and contribute to an increase in free parking spaces (Uber, Vi lanserar UberPOP). One argument that Uber highlights is the fact that in many other cities the types of carpooling that aligns with the UberPOP platform has started to supersede the traditional forms of owning a car. Meanwhile Uber states that UberPOP makes travelling by car easier and states following: “we supply the technology for the driver and passenger to find each other with a safe, cheap, comfortable and sustainable service”. (Uber, Vi lanserar UberPOP) A key difference between UberPOP and Uber’s other services, e.g. X, Black and Lux is that in order to provide these services the drives has to have two licenses, a taxi driver's license and a taxi license. On the other hand the UberPOP service was open for individuals who privately could connect themselves and their car to the Uber booking system and applications (Svenska Dagbladet 2016). It is however important to note that there was not a free entry in becoming an UberPOP driver, where Uber has qualification demands in order to supply the service. All drivers are interviewed, undergo training, have to possess a driver’s license for three years and undergo controls towards their criminal record. (Uber, Vi lanserar UberPOP). However, as previously stated, Uber Suspended their UberPOP services in March 2016. Alok Alström, the at the time CEO for Uber in Sweden claimed that UberPOP was a pilot project and that it had showed that with the help of technical solutions it is possible to supply an appreciated service. Simultaneously Alok Alström also claimed that Sweden lacks a regulatory framework that is compatible with modern carpooling platforms (Svenska Dagbladet 2016). Simultaneously, a legal case towards UberPOP drivers was handled in Svea Hovrätt12 (Sweden's second highest legal institution). In a court rule in March 2016, Svea Hovrätt stated that those who carry out and perform driving services through the UberPOP application are guilty of illegal taxi traffic and crime against the requirement of possessing a taxi driver’s identification (Svea hovrätt). Since 12 The Swedish court of appeal

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Transportstyrelsen is the authority that is responsible for applying and distributing taxi licenses in Sweden, the court rule of Svea Hovrätt became a determining decision for the procedures handled by Transportstyrelsen (Transportstyrelsen, Uberpop är olaga taxitrafik). 5.5.2 Uber in relation to preexisting laws and future regulative processes Regarding taxation and the increased activity of sharing economy in Sweden, the Swedish tax office (Skatteverket) has conducted a report regarding this subject. The report from October 2016 seeks to investigate how the sharing of underutilized assets through selling, renting, exchange, joint ownership and cooperative usage through digital marketplaces affects tax revenues and the taxation system. Skatteverket (2016) refers to their previous report that was conducted in March 2016, which states that there exist taxation errors within the sharing economy. The controls that were carried out points towards a common trend of unaccounted side incomes within the sector. And one of the main reasons behind this is according to Skatteverket (2016) the complication in how to perform the right accounting procedures and that it is both complicated to control and determine the tax level (Skatteverket 2016, p.4). At the same time Skatteverket also points towards the fact that there are applied rules in order to tax the transactions that are carried out within the sharing economy, but there exists an ambiguity in how they should be taxed. This ambiguity is based on three different factors; firstly there exists a discrepancy of the underlying taxation form; where the regular taxation forms are focused on traditional business models and not peer-to-peer models. Secondly it is hard to access information and verifiability within the area and thirdly there is an ambiguity in how the taxation rules are applied towards companies who operates within the sharing economy (Skatteverket 2016, p.4). While investigating the sharing economy in a Swedish context it is also important to note that Sweden as a member of the European Union has to take European law into consideration. In this case Skatteverket (2016) refers to the European commission's agenda towards collaborative economy where guidelines are being conducted in order to determine what laws that control the sharing platforms responsibilities and their obligations a member state can put towards these platforms. As in Sweden, the European commission states that there do exist problems within the tax field that is connected to the rules of income tax, corporate tax and value added tax. One key problem is how the sharing economy companies comply with regulations, which includes complications in identifying the taxpayer and their taxable income, deficient information of the service provider and differences in the member states tax praxis (Skatteverket 2016, p.14). Meanwhile, a working document that was presented by the European Commission demonstrates differences in the reception of the sharing economy. What could be concluded is that the responses towards the sharing models have had different responses depending on countries. While certain member states have deregulated and initiated deregulations in order to remove barriers: other member states have banned certain business models; while other member states regulative responses towards the

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sharing economy platforms are decided on a regional and local level (Skatteverket 2016, p.49). In the Swedish case, Skatteverket (2016) states that both Swedish law and international law has preexisting regulations that act towards a simplification from a fiscal perspective. These perspectives include both taxation law and the underlying information that the service provider has to provide, in order to get taxed. Skatteverket also states that there exist two simplifications of tax regulation that has had a great impact on the taxation towards the sharing economy. These simplifications are based on two forms of regulations: the income limit13 of when a provider is obliged to pay tax and the amount of information that the providers has to make accessible for respective authorities within the country (Skatteverket 2016, p.40). In conclusion Skatteverket (2016) states that the existing tax regulations are applicable to the sharing economy, that there are underlying taxation errors within the sharing economy based on implications for actors to do right and complication in verification from Skatteverket part. Meanwhile Skatteverket (2016) state that these trends are not exclusive for the sharing economy, but are more often actualized within this specific topic. Skatteverket also concludes that they cannot judge if the sharing economy leads to an increase or decrease in tax incomes, where factors such as the development of the sharing economy, how households distribute their time and the size of tax difference are all dependent variables that affect tax incomes (Skatteverket 2016, p.54). The report that was conducted for the Swedish Ministry of trade and industry states that regulative responses towards markets can lead to better functionality, but they can also lead to higher entry barriers and decreased functionality. According to (SOU 2016:86, p.190) the new market rules must be in proportion and that interventions should not be necessary if they risk harming or inhibiting already functioning markets. Regarding preexisting regulations such as the taximeter one can distinguish both pros and cons. As an instrument the taximeter provides a tool for controlling taxi companies incomes and information regarding travel distances during time periods; which in turn makes it easier for the Swedish tax office to impose taxes towards companies and service providers (SOU 2016:86, p.191). Meanwhile the report states new forms of taxi services without taximeters that are built upon technological innovations should be embraced since they create a higher variety of choice and could possibly lead to new business models (SOU 2016:86, p.194). The report also states that an alternative form of exercising taxi operations should be conducted. One of the main arguments are based on tax control where taxi vehicles who operate should be connected to a “ordering center” which can follow and register the taxi vehicle’s movement with the help of other technical solutions other than the taximeter. In turn this provides a basis for controlling taxi missions and payments and provides the “ordering center” necessary information regarding the sum of paid kilometers within the industry that can be sent to the Swedish tax office (SOU 2016:86, p.200). However, the report also states that

13 In Sweden, earnings below18 800 kronor do not have to be declared towards the Swedish tax office and employer fee’s for sole employers are peeled if the income does not exceed 10 000 kronor during one year (Skatteverket 2016, pp.49-50)

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technological solutions could have complications in finding less serious taxi actors that might withhold information from the authorities; in order to evade taxes (SOU 2016:86, p.201). In the case of collaborative forms of providing taxi services the report also highlights positive and negative effects. In the case of services that are similar to taxi services it can be concluded that these services can contribute to an increased efficiency in the transporting system, mostly based upon an increase in availability. Sharing services such as Uber can also contribute to a direct effects on the private economy where Uber drivers can earn money while passengers can save money by travelling cheaper than with a taxi service. It is also stated that an existing regulation can be common challenge towards services such as Uber. One topic that is highlighted by Uber operators is the need for a removal of the obligation of having a taxi traffic permission and taxi driver’s license (SOU 2016:86, pp.351-352). According to the report the abolishment of these permissions and licenses could however have a big impact on the traditional taxi industry. In turn this could lead to risks of a decrease in competence requirements and driving ability of drivers; which could lead to a reduced traffic safety, more part time employments and less permanent employment (SOU 2016:86, pp.353-354). This could also lead to a situation where private citizens become business operators and consumers in relation with each other; which could create complications towards legal frameworks regarding consumer rights and tax obligations. At the same time the increase of platforms such as Uber could increase availability and innovation while decreasing the price of taxi rides and creating new forms of employment, more flexible work hours and an increase in growth (SOU 2016:86, pp.353-354). The authors of the report state that there are different approaches in handling the increase in peer-to-peer platform based services. Given the deregulation of the Swedish taxi industry with free establishment and pricing, the legislators in Sweden have imposed different barriers of entry in order to reduce problems that might arise with these liberal market forms (SOU 2016:86, p.361). One statement is that there needs to be a clearer distinction between carpooling and services that are more similar to taxi services; where the services that are similar to taxi services should not be able to term themselves as carpooling, and thus applying to the same rules as the taxi industry (SOU 2016:86 361). The report also concludes that the existing framework today, given the definition of Uber services as a taxi service and not a carpooling service works according to the Swedish taxi regulations. It is stated that authorities has the right to punish by law people who uses platforms to conduct illegal taxi traffic by driving, carrying or mediate these services without necessary permits (SOU 2016:86 369).

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6. Analysis

6.1 Differences and similarities regarding regulations and reponses towards Uber in the U.S. and Sweden Regarding the empirical findings one can clearly distinguish different tendencies depending on the two countries of analysis. In the case of the U.S. there is a clear development of the regulatory responses towards Uber. Meanwhile, from a Swedish perspective the regulatory responses are currently in the starting point. However, with the suspension of UberPOP services in Sweden, the country has taken steps towards intervening against the emergence of sharing practices. The variations between the countries of analysis can be connected to the differences in time periods that Uber has been active in respective countries; since Uber was first established and introduced in the U.S. the time period for regulatory and policy responses has been longer than in the case of Sweden. By using the two countries of analysis one can clarify the differences in the process of regulations and policies towards Uber. This is mainly built upon the statement that neoliberalism can be seen as a phenomenon that takes contingent forms depending on different spatial levels and geographical areas. In combination with the VoC and institutional approach the differences in the development of practices towards Uber clarifies how these outcomes differ depending on institutional landscapes and norms, political systems, neoliberal processes, attitudes and differences in approaches towards sharing economy activities. Which combined helps explain the difference regarding the outcomes within the countries of analysis. As previously concluded there is a difference between the two countries of analysis, firstly the U.S. applies to federal law, state law and city regulations. This has created an environment where the development of policies and regulations towards Uber has been designed in variegated forms. This development is closely aligned with Gertler (2010) whose theories state that the development of neoliberalism is dependent on different spatial scales; which ranges from local- to national- to global with different institutional outcomes. Further, this can be highlighted in the development towards Uber policies and regulatory responses in the U.S. In some cases, on a state level the response towards Uber has been stricter, as in the case of suspensions or withdrawals of Uber in Alaska and Texas14. While in the case of the state of Massachusetts the state governor Charlie Baker has signed a legislation that is among the strictest in regard to other states. Meanwhile, there are situations where states have implemented regulations and policies with more liberal tendencies. This can be seen on a state level regarding Colorado, where Governor John Hickenlooper signed a legislation in order to embrace Uber technologies and promote innovation, or since the introduction of Uber in Washington D.C where regulatory measures were far less strict towards Uber than the traditional taxi sector. The variegated outcomes can further be developed regarding the state of Illinois where legislation has been implemented on a state level; but in contrast to the state level, Chicago, the third largest city 14 Or Nevada during the time period of 2014-2015

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in the U.S. regulate their taxi sector on a city level which has created a contingent outcome in regulations and policies towards Uber between the state of Illinois and the city of Chicago. In contrast to the U.S. the Swedish development of regulations and policies against Uber are easier to comprehend. This is mainly based upon the accessibility to government investigations and market coordination forms in combination with the difference in country size, population and political systems. This can also be connected to the VoC approach (Thelen 2005) where Sweden as a coordinated market economy is referred to as a country that possess institutions that allow companies to coordinate and cooperate in a long run period (Schröder & Voelzkow 2016) which could make it easier to clarify the rules of the taxi market in Sweden. The attitudes towards Uber in Sweden vary in comparison to the U.S. This is based upon the differences in market coordination forms regarding the taxi sector in respective countries, but also the key areas where problems are addressed. In the case of Sweden one has to take the European law into consideration, since European law can be either determining or directive. This creates a regulatory environment where Sweden applies to both domestic institutional arrangements but simultaneously using European member countries and commission reports as both yardsticks and determining institutions. Furthermore, the regulatory and policy responses towards Uber in Sweden have created a situation where Uber has been forced to adapt to Swedish legislation. Firstly with the case of UberPOP the conflict that arose between the regulatory landscape and Uber forced the company to put down their operations; a decision that was based upon Uber not applying to the regulations that are implemented upon the taxi industry in Sweden. This has led to other Uber services adapting to the rules, which includes taxi driver's license, taxi legislation and pricing rules. From a Swedish perspective there is also a broad discussion regarding both taxation and coordination forms of Uber in relation to the preexisting taxi sector. Much of the empirical findings point towards the question regarding taxation as an occurring topic, where most reports aim to develop and further nuance the question of collecting tax from both Uber and their operators. In regard of the coordination forms the findings point towards an increasing problematic in terms of measuring trip data and payments performed by Uber drivers. In turn this has created a discussion regarding the taximeters and new enactments and laws who aim to further collect data from Uber operators that can be handed to the Swedish tax office. 6.2 Varities of Capitalism as an analytical tool in understanding the differences between Uber practices in the U.S. and Sweden From a varieties of capitalism perspective one can distinguish differences regarding the capitalist models within the countries of analysis, which is mainly based upon the ways that the arguments and regulations are formulated towards Uber. In the case of the U.S. when seen as a Liberal Market Economy one can see contradictory tendencies towards the VoC theory. One clear distinction is the case of the taxi market in the U.S where the market is regulated and regulations are commonly applied in order to coordinate the market. From an Uber perspective this has created implications since the introduction of the service, but as

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previously stated the responses are ambiguous. In some cases the attitudes and receptions are moving towards a liberal mindset of letting technological innovations handle screening processes; something that the government was previously authorized to perform. Meanwhile certain states have banned Uber services, while many states have implemented strict regulatory frameworks that inhibit the Uber business model. A results is, that on a state and city level the liberal market forms in the U.S are clearly variegated which can be connected to Brenner, Peck & Theodore (2010) who argues that the VoC approach from an institutional economic geography perspective can highlight the differences in path-dependent regulations. Meanwhile, both the for- and against arguments towards Uber differ in comparison to Sweden. In the U.S the arguments are mostly based upon consumer protection, employment contracting, guarantee insurances for passengers, and screening processes. In summary it should be stated that many of the regulatory measurements that have been taken against Uber in the U.S. deviates from the liberal ideas and tends to focus on an interventionist approach. In the case of Sweden the approach against Uber and the arguments and regulatory measures that are formulated focuses on preexisting market coordination forms. Seeing Sweden as a Coordinated Market Economy in accordance to the VoC theory can clearly distinguish the systematic approach towards Uber. This is clearly visible in the ways that Uber has been forced to apply to the preexisting regulatory frameworks within the country; applying to taxi driver’s licenses, taxi license and providing driving data. This can be seen from Weiss (2005) who states that companies within CME countries are subject to different abilities of innovation, which are dependent on the institutional structures; where the Swedish case clearly highlights the focus on coordination abilities rather than innovations. In regard to the empirical findings regarding Sweden it is also notable that there is a will to merge Uber with the Swedish taxi market. But the implementation of Uber comes under the conditions that Uber applies to Swedish regulations. This includes the topic of providing systems that can more efficiently raise taxation from the company and its operators. It also involves a system that seeks to provide regulatory frameworks that will ensure that the correct procedures are being performed. This can be seen as in accordance to Thelen (2005) who states that CMEs seek to keep previously coordination abilities within their markets. However, bearing these statements in mind it is also important to conclude that in similarity to the U.S. the introduction of Uber in Sweden has created a discussion regarding the traditional taxi sector and which underlying regulations that are important to keep and which are important to reevaluate in order to create a stability in regard to changes within the taxi market. According to Gertler (2010) the VoC approach has implications because of its dualistic approach of reducing countries into idealistic categories. By using the VoC theory on the empirical findings it is also important to conclude that this approach creates complications in analyzing the different countries. The VoC approach can clearly distinguish differences within capitalist systems, but as we can see from the empirical findings in the U.S. the liberal responses towards Uber differ depending on geographical levels, contingent and path-dependent regulatory processes and institutional settings. According to Schröeder &

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Voelzkow (2016) LMEs are to a larger extent than CMEs promoters and holders of comparative strengths towards innovation, which can be summarized as an occurrence when comparing the U.S. to Sweden. This is mainly built upon the fact that the U.S. has less strict market interventions against Uber in comparison to Sweden; where the regulative forms are very dependent on Uber applying to the regulatory frameworks within the nation. In conjunction companies in CMEs are to a larger extent dependent and function in relationship with the state in order to overcome game-theoretic dilemmas, which can be clearly be pointed out regarding Sweden and in comparison to the U.S. 6.3 Neoliberalization or interventionism, the role of institutions in the U.S. and Sweden In terms of the neoliberal and institutional theoretical standpoints taken in this thesis it is important to conclude that Uber operates within a gray area. As time-space shrinking technology has and will have a further impact on the global economy, it can be concluded that the Uber platform, which can be defined as a time-space shrinking technology creates problems in different areas. Since these technological solutions can work outside of the given institutional settings and seen as a force of neoliberalization it is important to further present both the complications and opportunities that Uber has created. In terms of neoliberal theory both Harvey (2005) and Ferguson (2009) argue that neoliberalism include an advocacy of free markets and flexibility in labour markets, however in the case of Uber this development is ambiguous. Based on the empirical findings it can be concluded that the emergence of Uber can be seen as a symptom of increased neoliberalism. This is further concluded by Kotz (2002) and Larner (2003) who argue that neoliberalism in combination with TNCs has altered and changed their relation to the state; working towards deregulations and decreased regulations which can spur their competitiveness on the global market. Meanwhile the empirical findings show that much of the responses towards Uber are based upon a regulatory experimentation on different spatial levels, which has resulted in variegated regulatory forms that are highlighted by Peck & Tickell (2002). This statement is also closely aligned with Brenner, Peck & Theodore (2010) who argue that neoliberalism has created different platforms where experiments on market-oriented neoliberal reforms and policy prototypes are created. However, the statements are also contradictory since the steps that have been taken towards Uber practices rather focuses on an interventionist approach, protecting incumbents and forcing Uber to apply to the underlying regulatory framework. In both Sweden and the U.S. we can see that the development varies depending on both national- state- and local levels. For instance, nearly all states in the U.S. agree upon the implementation of insurance responsibilities towards sharing economy companies. However the regulatory and policy development varies depending on geographical areas, where most of the actions taken in the U.S. and Sweden have tendencies to regulate and inhibit the growth of sharing practices. This is mostly based upon the conflict that occurs when new business models intrudes on incumbent markets, since Uber can be seen as a force that thrives upon an arbitrage based on disregarding legislation and certain tax claims. These statements can be further connected to the

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institutional perspective. As stated by Martin (2001) and Gertler (2010) there are two different forms of perspectives, the institutional environment that highlights conventions, norms and unwritten rules and the institutional arrangements that highlight firms, labour unions, regulation and welfare states (Martin 2001). In regard to the expansion of Uber both of these perspectives play an important role. From the institutional arrangement perspective the arguments that are being formulated by both proponents and opponents are based upon conventions, norms and subjective conclusions. This can clearly be highlighted in the discussion that is occurring between both parties, the proponents who argue that cheaper pricing, sustainability, liberalization of the transport sector; increased availability and that consumer rating systems are positively challenging the traditional transporting sector. Meanwhile opponents, who include legislators, lobbies and incumbents, argue for the necessity of legislation in order to protect passenger and consumer safety, retain tax incomes, labour rights and keep a systematic approach within the sector in order to prevent the market from losing control. In turn this creates a discussion regarding how institutional landscapes should be designed in order to keep the market in balance. This also creates a discussion of the role of institutions that can be connected to Knight (1985) regarding risks and uncertainties within the market and Fligstein (1996) who speaks about the idea of markets as politics where capitalist economies design institutional conditions in order to create market stability. In combination the role of institutions highlights an increasing topic, which occurs in parallel with the growth of sharing activities. Since institutions are implemented in order to protect the consumer and create stability within the market, new platforms such as Uber have further highlighted the debate regarding the necessity and shape of institutions within the taxi and transport sector. This has led to a situation where time-space shrinking technology has created a change within the institutional landscapes within countries. Leading back to the empirical findings two standpoints can be taken, the first standpoint is that technological innovation has created a change within the taxi sector and affected both the incumbent firms and legislators. The discussion falls under the topic of promoting technological innovation and transaction forms that are in a larger extent community based; or protecting the traditional sector and the rules that are commonly accepted and applied. It also creates a discussion regarding the necessity of different types of policies and regulations; where Uber has proven that taxi services can be performed outside of the legal landscapes on both national and state level, however with ambiguous results within the countries of analysis. The second standpoint regards the dichotomy between neoliberalism and strong state. According to Friedman (1962) who argues that state interference creates inefficient outcomes; while Weiss (2005) and Christopherson (2002) address the argument of the positive effects of state intervention within markets. This discussion can be derived to the case of Uber where the empirical findings point towards an interventionist attitude in regard to Uber practices, which includes the topic of taxation, labour rights and protection of incumbents. What can be concluded is that the emergence of Uber has challenged the market

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coordination forms within traditional markets, where regulators find themselves within a complex situation between supporting innovation and community coordinated market transactions or intervening in order to support the traditional institutional and regulatory frameworks. As previously concluded Uber operates within a gray area that is important to address and is tightly connected to both interventionism and the spread of neoliberalism. Since many of the underlying regulatory frameworks are implemented in order to protect both employees and consumers, there is one empirical finding that is important not to overlook; the discussion of who is responsible for taxation fees, employment insurances, pensions and employer fees. Bearing this in mind, it would be wise to state that one of the main arguments for intervening within the sharing economy is in order to protect these systems that the society is mainly built upon. However this is contradictory to the arguments of neoliberalism, where the opponents argue that this philosophy is constantly creating new situations of market liberalization and dissolvement of labour policies; where the market actions points to opposite in regard to the neoliberal argument. Meanwhile one can also find support in the theories argued by (Peck & Tickell 2002) where the spread of neoliberalism is variegated by its character, and that neoliberalism as an idea is a process that creates contingent outcomes, with different scopes of state intervention and labour regulations (Peck & Tickell 2002, pp.383-388).

7. Conclusion

The new form of transactions that has emerged in parallel with the rise of Uber has challenged the traditional taxi sectors in the U.S. and Sweden. Since the Uber application is built upon a model that works within a grey area in regard to the regulatory landscape this drive-hailing application can earn money by operating upon an arbitrage regarding regulations and laws. With the emergence of Uber it can be concluded that these new forms of transacting can be seen as the symptom of an increase in neoliberal theories and ideas; which include the creation of market liberalization and dissolvement of labour practices. While discussing the reception towards Uber it is vital to state that the reception, regulative responses and attitudes towards Uber are mostly formulated against the neoliberal idea and towards an interventionist mindset. This conclusion is based upon most of the regulations that have been implemented towards Uber works towards protecting or finding settlements between incumbent firms, underlying institutional settings and Uber. These protections include norms and set rules which inhibits the expansion of Uber; however the responses and targeted efforts vary depending on differences between the geographical areas that have been studied. This can be highlighted by the differences in the U.S. and Sweden. Regarding the U.S. most of the regulatory discussions take place on a state level where regulators has adapted laws in order to further balance the market rules for Uber and the traditional taxi sector, however in some cases this has resulted in an ambigious process of different regulatory practices. It is further important to conclude that in some cases, e.g. the state of Colorado the divison between Uber practices and the traditional taxi industry has gone even further, where Uber and the sharing economy are not subject to regulations. While in other cases, e.g. the states of Illinois and Alaska have applied regulatory practices towards Uber in order to clearly inhibit their business model and expansion. In Sweden, the regulatory

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process is still taking shape, where the key arguments and the main conflict variables are how Uber should adapt to Swedish taxi law and rules of taxation. In both cases that are studied it is important to note that much of the conflict regarding Uber is based upon the definition of their driver’s; where the ambigiuity lies within the responsibility for paying social fees, insurances and labour rights. This is symptomatic with both cases and the conflict that arises with the expansion of Uber. One clear tendencay is that the expansion of Uber creates complications in the settled institutional rules and arrangements. Mainly based upon the rules that states apply to companies that protect the employees and citizens, when Uber bypasses these rules by defining their driver’s as self employed one clear conflict arises; the conflict between institutional settings and new forms of transaction (the peer-to-peer platforms that drives the sharing economy). The interventionist tendencies towards Uber leads to a question of how nations should apply to the emergence of Uber activities, where one key position is to point towards the fact that certain parts of the traditional transport sector and practices could be outdated. Bearing these statements in mind, one of the most noticeable problems that the Uber platform creates is how they challenge the traditional procedures of supplying taxi transports. In this case Uber is an ongoing discussion in terms of worker rights, wage levels, taxation and if the liability is put on Uber’s drivers or the company while performing a service. This leads to a discussion where states feel the necessity to protect their citizens from uncertainties in market outcomes and protect their own markets in order to balance the set market rules, worker rights and conditions along with protecting tax incomes. However, it should further be concluded that Uber can have a positive impacts on citizens private economy, create a greater mobility and range within the transport sector and enables their drivers to dispose their working hours and their own resources depending on their own will. 7.1 Future research In order to further nuance and learn about the regulatory debate that has incurred in combination with the rapid expansion of Uber, a future research subject should focus on a comparative analysis of two countries with a similar geographical setting. One approach would be to perform a study using two countries that are both members of the European Union but are built upon different political systems, e.g. one Liberal Market Economy and one Coordinated Market Economy. Similar cases on a different geographical scale could focus on difference between states in the U.S. where the topic of analysis could be performed on two states with two different mindsets towards regulating Uber. Future research could also include a historical approach seeing if similar economic activities have challenged traditional sectors; with the help of technological and innovational solutions. This could include seeing what responses and measurements were taken during the specific case. It can also be concluded that the sharing economy is expanding leading to many different services, one future research subject could focus on sharing economy companies within other sectors, such as Airbnb (housing), EatWith (dining) or Taskrabbit (service provision and self-employment) where all companies are similar to Uber in regard

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to providing services within a regulatory gray area and challenging traditional practices and institutional/regulatory frameworks.

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