Beyond the Ride: Uber’s disruption of Manchester’s Mobility System

 

Have you ever been studying late at the library; it’s a rainy night in Manchester and the next bus isn’t due for another half an hour. You open Uber and a car could come and pick you up within seconds. This is a faster, more comfortable, and often cheaper way than traditional taxis. For many students, this has become the new norm for daily travel but as Uber becomes the go-to choice for convenience, its rise raises important economic questions: what is happening to Manchester’s black cabs? How is public transport affected when more people choose ride-hailing? And what hidden risks come with platforms that rely on flexible, less-regulated drivers? The choice between the bus or an Uber has implications for various economic factors including price competition, negative externalities, and the challenges of adverse selection and moral hazard. Uber’s influential impact in Manchester goes far beyond getting from A to B, and realising these economic implications can help us to comprehend how a specific application is insidiously changing the transportation economy of the city. To understand Uber’s full economic impact, we must look beyond its app and examine how it’s reshaping competition, public infrastructure, and the rules between platforms and people.

Uber and the Decline of Traditional Taxis

Traditional taxis are constrained by high fares and strict regulations, but Uber managed to rapidly gain market share through introducing lower prices, shorter waiting times, and tech-based convenience. From a microeconomic point of view, this is a classic scenario of price competition within an evolving market structure.

As an increasing number of people prefer using Uber, the number of customers that rely on traditional taxis has undoubtedly decreased, making it progressively challenging for taxi drivers to find work. Drivers may even consider leaving the profession, representing creative destruction where innovation replaces outdated business model. For London, the numbers fell from 22,810 black cabs in 2013–14 to 14,470 in 2023–24, portraying a steep decline of cab drivers, partially due to the influx of ride-hailing services like Uber (The Guardian, 2025). This is not just a dilemma for Manchester but also for various cities across the UK: Uber's competition, which certainly isn't fair right now, is becoming fiercer and the Uberization of taxis is destroying livelihoods which is clear for everyone to see.

Convenience at a Cost: The Hidden Impact on Buses and Trams

While Uber is known for its convenience, its rapid expansion can lead to unintended consequences for the wider transport system, known as externalities. In particular, Uber has been linked to negative externalities though increased congestion, higher emissions, and a decline in public transport use causing negative effects on the local residents.

Consumers preferences are changing from buses and trams, to private taxis; particularly in urban areas like Manchester, public transport faces fewer passengers and revenue loss, putting pressure on local authorities to maintain services despite reduced revenue. Meanwhile, more Ubers on the road cause additional traffic and pollution costs which are not paid by the individual riders, but by society as a whole. Shouldn’t the riders bear more of the cost?

To respond, starting in January 2025, Manchester have introduced an indispensable transport reform: buses will be taken back into the control of the public sector for the first time in 40 years. The plan is to increase the number of buses per hour, reduce fares, and make buses a convenient transport option once again. Although the policy is not strictly aimed at Uber, it is nevertheless indicative of the growing concerns over Uber’s potential adverse effects on the public system (Financial Times, 2024).

Uber will also be affected by worsened negative externalities of public transport systems, particularly emissions and social isolation. Cities now have an emerging priority: maintaining a certain standard when modernising infrastructure. Proper regulation, combined with subsidies or road-use charges, could form the necessary tools to guarantee equitable and effective mobility services for everyone.

Hidden Risks on the Road – Adverse Selection and Moral Hazard

Even with the ease of choosing to take an Uber, there is also a more subtle economic problem: asymmetric information. Riders don’t know much about their driver beyond a star rating and driver picture, and Uber can’t perfectly monitor every driver’s behavior. Promoting two classic microeconomic issues: adverse selection and moral hazard.

Adverse selection occurs when it is difficult to remove low-quality providers. Unlike traditional taxi drivers - who often go through strict licensing, background checks, and local knowledge exams - Uber drivers face lower entry barriers. While this widens the labor pool, it may also allow less qualified or unsafe drivers into the market. The quality of service becomes uncertain, and trust relies heavily on user reviews and Uber’s internal systems (Investopedia, 2021).

Next is moral hazard: after onboarding a driver, they make act lazier and more reckless as they are unlikely to be assessed due to limited monitoring. Some drivers cancel rides or take longer routes which may only be noticed by the passengers and therefore control over the system is weak and measurement over quality will be ineffective. Although Uber has introduced rating systems and algorithmic supervision to alleviate these issues, they remain unresolved, and Uber continues to struggle with providing sufficient access while ensuring responsibility. As it expands, understanding the information asymmetries will be increasingly important in ensuring a safe and efficient transportation system.

Conclusion:

Uber's innovative impact has transformed Manchester’s transport market by bypassing traditional taxis but also introducing hidden public costs, therefore exposing the limits of platform responsibility. Still, with innovation comes the challenge of market disruption and externalities as well as asymmetric information; even the convenience of Uber's technology comes at a price. As cities such as Manchester grapple with policy change, one of the biggest challenges is whether innovation and regulation can work together. The focus will be on how to achieve a merger of competition and equity within a transport system that serves the individual and society simultaneously.

Reference List

BBC News. (2019). Uber London licence: TfL denies new licence over safety. [online] Available at: https://www.bbc.co.uk/news/uk-england-london-50549948 (Accessed: March 23, 2025)

Financial Times. (2024). Andy Burnham’s Manchester bus shake-up will test appetite for state control. [online] Available at: https://www.ft.com/content/f47a31bc-60da-465c-9fe7-dfd94ceef952 (Accessed: March 23, 2025)

Investopedia. (2021). Asymmetric Information in Economics Explained. [online] Available at: https://www.investopedia.com/terms/a/asymmetricinformation.asp (Accessed: March 23, 2025)

The Guardian. (2025). London’s black cabs ‘destined for extinction’ in 20 years, TfL warned. [online] Available at: https://www.theguardian.com/uk-news/2025/mar/19/londons-black-cabs-destined-for-extinction-in-20-years-tfl-warned (Accessed: March 23, 2025)