This case study analyses the events that led to the decision passed by the Municipality of Budapest in April 2013 radically transforming the taxi market of the capital as well as the measure’s immediate impact. The new rules were aimed at establishing “law and order” in the taxi market of the capital – and it is more or less in line with global trends – although the municipality failed to conduct any studies about international developments in this area prior to making the decision. It became increasingly more obvious that the trade unions and employees’ organizations got into a subordinate position vis-à-vis the Municipality of Budapest in the negotiations process for two reasons: they were lacking legitimacy, and the mayor succeeded in dividing the participating interest groups. The new rules were so strict they could not be adhered to, and as a result had to be modified merely two months after their introduction. Even with the amendments the rules impose uniform tariffs in a market, which had been highly segmented to begin with, one unexpected result being that players who are outside the regulated market are increasing their market share rapidly.*
Journal of Economic Literature (JEL) codes: K23, L51, L92, L98
