Anybody who has taken a flight or paid a telephone bill in recent years already understands the enormous benefits that arise when free competition is permitted.
In contrast, the historical restriction on the number of taxis in Dublin prevented the market from responding to growing consumer demand. The recent decision by the Government to open the taxi market is indeed very welcome.
Consumer demand is the basis for any market. The fact of more taxis entering the market will enable, for the first time in 22 years, the provision of a taxi service responsive to consumer demand.
New supply will cause the market to expand, increasing employment and making passenger queues a thing of the past. A more responsive market will also enhance public safety and choice, supporting anti-drink-driving efforts and making it easier for lone women and the disabled to travel.
This is good news for all consumers, businesses, tourism and the economy as a whole.
Yesterday's decision by the High Court not to prevent new taxis from supplying the market pending a full hearing of the taxi drivers' case is also welcome. New licensees are already on the street in Dublin and supply may double or treble. The indications already are that that the taxi supply in Cork (which had fewer licences than Limerick) will more than double.
Calling this deregulation is misleading. Regulatory reform is a better description, because only one element, entry, is liberalised, while fare controls are maintained and quality standards improved.
Controls on fares protect passengers from exploitation. Enforcement of quality standards and fare controls is essential if the benefits of new entry and competition are to be delivered in full.
Scare stories abound regarding disastrous deregulation abroad, where controls on fares and quality standards were abandoned. On the contrary, unrestricted entry works well in the London market where regulation focuses on fares and quality standards.
If reform of the Dublin market works as efficiently as in London, it will have tremendously positive effects for consumers in the taxi market. Furthermore, it will build public support for similar regulatory reform in areas such as electricity, public houses and pharmacies, where competition is similarly restricted.
In order to deliver the full benefits of reform into the future and to build support for regulatory reform in other markets, important decisions need to be taken about regulatory structures. The current system, whereby the Department of the Environment, the Garda and local authorities supervise different aspects of taxi service provision, lacks coherence and transparency.
Excessive qualitative standards should not be allowed to stymie entry in an equivalent manner to the numerical restrictions that have just been impugned. Instead, the imposition of new standards or changes in fare levels should be subject to widespread consultation in an open and transparent manner, and not confined to private discussions with the industry suppliers.
The Government has agreed to compensate fully the 800 or so who purchased wheelchair accessible licences from local authorities for up to £15,000 in the past three years. I believe this is a good decision, as any regulatory body that cashes in on a monopoly has an interest in its preservation that could override regulating the market for the benefit of consumers.
For the remaining 2,000, the Government will allow tax write-offs on the depreciation in the value of licences.
While the question of compensation is ultimately a political one, there are sound competition policy arguments against further compensation.
First, anybody who has owned a licence for more than five years has had the potential of bumper returns by virtue of the constant queues of passengers.
Second, those who purchased a licence in the past five years clearly knew the risk because new entry was likely. In effect, they placed a bet on a horse called monopoly, and the State should not pay out on losing bets.
Some responsibility for this situation rests with the leaders of the taxi industry, who lobbied for the continuance of the monopoly.
Third, the £80,000 was paid to former taxi plate owners, not to consumers or the Exchequer. It is difficult to see, therefore, why taxpayers should pick up the tab for this, especially when, as queuing consumers, they have already paid dearly in terms of lack of service.
Fourth, cartels and monopolists are normally fined and penalised for the costs they impose on consumers and the economy. Paying compensation as a prize for monopoly would fly in the face of this principle.
Compensation would increase the incentive for firms in other markets to lobby for the State to protect them from competition. Everybody is familiar with the effects of State restrictions in such markets as pubs, electricity and transport.
In recent years, other industry groups have increasingly lobbied for similar protection in their own markets. Acceding to such demands damages consumers, businesses and competitiveness alike. In taking a firm and decisive stance on compensation, the Government sends a clear signal that it wishes to tackle the significant and growing problem of State restrictions on competition.
Now that the State restriction on entry to the taxi market has been removed, it is of paramount importance that new suppliers can enter easily. Any attempts by existing taxi plate owners or their representative associations to prevent new entrants from using taxi ranks (or otherwise having access to consumers) would raise serious concerns under competition law.
It is incumbent on new taxi drivers, consumers, and businesses fully to exercise their rights under the law to ensure that this new regulatory reform has a real effect on the streets.
John Fingleton is chairman of the Competition Authority