Monopolies and Bicycles

When you think of New York City, a host of images often comes to mind: the Empire State Building, the Statue of Liberty, the billboards of Times Square, and probably somewhere in that collage you’ll see the iconic yellow taxi.

When I first lived in New York over twenty years ago, the streets ran with gold. Every other car was a yellow taxi. These days, it feels like it’s 1 in every 20 or more cars is a cab. Uber, Lyft, and privately owned cars make up the vast majority of the traffic to the point that you often wait not for a taxi that’s available, but to catch sight of a yellow cab at all.

It’s an amazing transformation that we barely appreciate because it happened over time. The other massive change to the city that we don’t fully appreciate is the rise of cycling. Riding a bike in New York was a health hazard twenty years ago. There were films about how bike messaging was a daredevil occupation. Bike lanes were nonexistent, and only the insane would cross the city on two wheels.

That has all changed. Dedicated bike lanes are now everywhere, with signage directing bikers on the best cross-town streets. This has happened largely because of Citi Bike, Launched in 2013, with a sponsor in Citibank and later in Lyft, Citi Bike has transformed New York into a truly bike-friendly city. And it’s impossible to imagine this working if competition were allowed into the space. Citi Bike has a monopoly on bike rideshare in New York and that’s a very good thing.

Competition and monopoly are words that come loaded with emotional bias. Competition is good and monopolies are bad. I think the simplicity of this blinds us to how useful each can be in different ways. Healthy competition usually involves separate niches. Imagine two competing power grids, both supplying juice to your home, with double the number of incompatible outlets around your house. The waste of deploying this infrastructure would not make up for any downward pricing pressure. But now think of a solar company moving in to add panels to new and existing homes. Same kind of service but completely different infrastructure.

The same is true for wireless communication versus wired. Nothing was more wasteful than several companies laying fiber and coaxial to every home in the late 20th century. Real competition came when that same service could be transmitted from towers wirelessly. We often think competition needs to come from similar looking things, but it’s better when it looks completely different while serving a similar need. Instead of laying train tracks parallel to existing train tracks, those tracks are regulated while cargo also flows on interstate highways and via cargo ships. Same service but different niches.

Bike rideshare wouldn’t work without standardization. You need every bike to fit in the same docking stations. And you need to know that your destination will have a docking station nearby. Compare the bikes in New York with the electric scooters in LA. Without a contracted monopoly, LA has descended into chaos instead of building out a reliable, standardized system of scooter rental. You need to have three or four apps on your phone to use whatever happens to be lying around. There’s no reliability of pick-up location. Allowing “market forces” to arrive at a solution is laughable compared to the union of corporate monopoly and government regulation in New York, two dirty words that instead bring unique benefits.

The only way to transform a city into a biking utopia is with just such a union. You need to re-zone streets and existing infrastructure, turning parking spots into bike lanes. You need signage and dedicated bike traffic lights. You have to put in underground power for docking stations. And you have to commit to long-term contracts with a single operator instead of confusing the market with multiple entrants. Government and corporation working together in New York absolutely destroys laissez faire and tech companies working via anarchy in LA. The difference is staggering. And yet the common refrain is that government and absence of competition are problems.

There are over 30,000 bikes in the Citi Bike program now, with expansions into all boroughs and New Jersey. E-bikes have been added, and they are a blast to ride. On top of this new biking infrastructure, the delivery network in New York has completely changed. A frequent sight in the city now is a worker on an e-bike delivering food. The difference is felt in your home when you order in — cuisine arrives at your apartment almost as fast as it would arrive at your table in a restaurant.

It’s easy to imagine a future New York that looks a lot like Amsterdam. New York is a flat city with mild winters and a dense population. Grabbing a bike is already the best way for getting to most places on most days. It’s helping the city get greener, helps us get more exercise, and it’s an absolute blast on date nights or just running errands with my wife. None of it would work without embracing a single entrant and allowing them to keep their exclusive contract. It feels like these examples are everywhere around us, but we cling to our notions of what works and what doesn’t on an emotional level, rather than a rational one.


10 responses to “Monopolies and Bicycles”

  1. Another facet to your observation involves imitation and innovation. Touring Europe to figure out how they created the massive public transportation system would be a lot better than trying to reinvent the wheel. Europeans looked to the US to learn about democracy, then adapted it for their countries. Granted, some were more successful than others.
    Imitation has its rewards. Innovation has its drawbacks. Imitation can seem like cheating. Innovation can lead to new, more workable solutions. Both are necessary. Neither works all the time.
    The wheel cannot be improved but it can be adapted, for instance gears or wheels for tracks. Sleds were an innovation for moving across ice or places where wheels don’t have traction.

    1. “Europeans looked to the US to learn about democracy”!? Seriously?! That was a joke, right?

  2. Hi Hugh. I found your article pretty interesting and feel I’ve got a glint on what it’s like over there better than I did before.

  3. Carlo DeCarlo Avatar

    Additional pleasant side effects of the bikes (and hybrid and electric taxis forced on NYC by Bloomberg, thank goodness) is that the streets aren’t as loud or as filled with car fumes. Reduction in noise and air pollution makes NYC a nicer place to be.

  4. That is interesting, but for someone from the country in North Carolina where the population density is varied your descriptions sound so different to me. I admit though it would be intriguing to have so much so close and to be able to use transportation other than a car.

  5. I’m not sure. I’m not all that committed to competition, etc, but I live in the Denver area and we have ebikes from Lyft and Uber, I think, along with every kind of scooter on the planet, it seems. Some make a mess, lying around where abandoned. But downtown Denver has installed separate bike lanes an in some places there are bike specific traffic lights – very helpful. I drive Uber so I’m in the city a lot, although I haven’t ridden my bike there and probably wouldn’t. Still too big for me. Lots of our surrounding towns have the best bike trails you’ve ever seen :-) I live in a town with easy access to all businesses via bike, but it’s not NYC. I’m happy to hear of anything that makes anyplace more livable. I’ll read your article again. I probably didn’t connect all the dots. Cheers.

  6. Marc B. DeGeorge Avatar
    Marc B. DeGeorge

    Hi Hugh,
    I’m also an NYC resident, and as great as the Citibike program is in comparison to LA, the expansion of the program, plus increased two-wheel traffic on the roads is not without its challenges. Many riders are either unfamilar with, or do not care about traffic laws. And some have been violently agressive about the city’s open streets progam, despite it also benefitting them. In additional, the DOT doesn’t always consider the impact of placing a bike lane on a street, so narrow, that a four (or more) and a two wheeled vehicle can ride side-by-side. I think continued study, development and regulation and enforcement of traffic laws on cyclists will help smooth the way for a better and more functional system.

  7. I swear when I read some of your stuff it’s like we share half a brain. Lol. I completely agree with your assessment of monopolies, competition, etc, and how it’s not necessarily inherently evil. Saving this article for future reference. :)

  8. Agree with all of the above except the assertion that NYC has “mild” winters. When I lived there (also about 20 years ago) I found them brutal. The narrow concrete canyons turned even the mildest of breezes into a frigid wind-chill tunnel that made cooler days unbearable. Hence my relocation to Denver which–compared to NYC–seems tropical in comparison.

  9. Here is a rational thought for you – – where are all those cars going to park? Not everyone can ride a bicycle. What does Amsterdam do with cars? I love the idea but rational thinking tells you cars need a place to park.

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