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Getting the Right Fit in the Sharing Economy: Interest Group Participation

in Regulatory Policymaking on the Different Cases of

Uber and Grab in the Philippines

Proposed by

Kriztia Credenda N. Torayno

Proposed to

Ms. Natividad Cristina J. Gruet

Thesis Adviser

A Concept Paper In Partial Fulfillment to the Requirements of

Master of Arts in Political Economy

School of Law and Governance

University of Asia and the Pacific

September 1, 2017
AREA OF STUDY

This study will integrate the areas of political science, economics, and sociology on

analyzing the emergence of the ‘sharing economy’ in transport and how government regulation can

come fit towards establishing welfare benefits among actors in the economy.

BACKGROUND TO THE STUDY

The recent boom of internet commerce has help innovate mobility and transport. Ride

sharing companies, Grab and Uber in the Philippines have penetrated the market economy with its

insertion of the ‘sharing economy’. The use of mobile applications with the use of the internet has

challenged traditional incumbent firms hence, ‘disruptive’ as it create a service that “repackages old

technology” (Katz, 2015). This has also challenged government regulators as it is an “innovation

that disrupts existing regulatory schemes”, vis-a-vis, regulatory disruption (Cortez cited by Katz,

2015).

Recent studies include the European Union presenting the puzzle at hand given the case of

Uber to generate a fitting regulation (Azevedo & Maciejewski, 2015). The academe has also been

puzzled by the same issue as in the case of The University of British Columbia as it presented a

study presenting a review of impacts and emerging regulatory framework for the Transportation

Network Companies, specifically, Uber. More importantly, the study has given policy analysis and

options for possible regulations (Ngo, 2015).

The puzzle has also been more evident in the Philippines given the lack of appropriate

policy for LTFRB to regulate Transport Network Companies given its difference in nature as

compared with taxis (Philippine News Agency, 2017).

Much interest is placed on regulation, and how a study would be helpful to guide the

creation of an appropriate regulatory framework. Primarily, understanding regulation in the market

economy would be necessary. According to Meir, “Regulatory policy must be viewed as a complex
interaction between the interests and resources of industry, consumers, regulatory bureaucrats, and

other political elites” (1988).

Integrating a more comprehensive approach, that of political economy, this shall adopt a

“positive perspective” that views “regulation as demanded and supplied as a function of the

interests of those who incur the distributive consequences of policy alternatives” (ibid).

Specifically, the regulatory policy should be designed given the present issue (political activity) and

to reach “possible opportunistic political action intended to change the policy as a result of

information gained through experience with that policy” (Meir, 2007).

The gap is found on how to reach a decision (output as political action) towards the issue of

regulation in the different cases of Uber and Grab in the Philippines, as specific representatives

from the ‘sharing economy’ and TNC considerations.

STATEMENT OF THE PROBLEM

How does interest group participation affect the puzzle of propriety and efficiency in the

creation of a new regulatory framework for the differing cases of Uber and Grab in the Philippines?

a. Who are the interest groups and why are they involved in the cases of Uber and Grab in

the Philippines?

a. 1. How are the powers or influences of each group affect policy decisions?

a. 1.1. How are the interplay of political influences from taxi lobby groups,

and private companies affect legislative decisions evident in decision

making?

a. 2.2. How are the interplay of social influences emphasizing the welfare

(safety, comfortability, and predictability) of clients and drivers evident in

decision making?

a. 2.3. How are the interplay of economic influences integrating market

supply and demand, minimal transaction costs, gains from increased


mobility, gains from the advancement in technology, and increased profits

for drivers evident in decision making?

a.2. How different is Uber from Grab, and vice-versa? Are the interest groups

observed the same?

b. How are regulatory frameworks created in the Philippines? Are there similar cases in the

historical narrative of regulatory framework creation that interest group participation has

been a crucial step towards generating a fitting regulation for the industry and its issue/s?

OBJECTIVES OF THE STUDY

This study aims to explain whether interest group participation can affect positively or

negatively the puzzle of propriety and efficiency in the creation of a regulatory framework.

a. Distinguish the difference of Uber and Grab and identify the interest groups of each

explaining their inclusion;

a.1. Discuss what are the various aspects of political, social, and economic narratives

related to Uber and Grab;

a.2. Gather data from the interest groups on their inputs for the issues on Uber and

Grab and the regulation needed in reference to their interests and background (i.e.

government and non-government actors);

a. 2.1. Identify lobby groups and the connections inside the congress to assess

political influences, and legislative preferences in the rhetoric of previous

readings on regulation for Uber and Grab.

a. 2. 2. Identify social pulse on both drivers and clients‘ safety, comfortability,

and predictability;
a. 2.3. Analyze economic data on the case of Uber and Grab (supply and

demand, minimal transaction costs, gains from increased mobility, gains from

the advancement in technology and increased profits for drivers)

a.3. Discuss how these narratives, surveys, group discussion results have become

influences, and represented by the interest groups;

a. 3. 1. How does the legislative integrates these inputs in the policymaking

procedure;

a.4. Identify and distinguish power and influence of each interest groups;

b. Identify and describe historical narratives relating to regulatory frameworks that include

interest group participation in its creation. Discuss output and impact from these regulations

(policy evaluation).

QUESTIONS and/or Hypothesis

1. Interest groups in the Philippines are expanded given the benefits that Uber and Grab have

brought to society;

2. Government is open to these inputs (given the government structure, but how about the

actual process? )

3. There are historical narratives related to the creation of regulatory framework, and the

positive effect of interest group participation.

4. Am I assuming a pluralistic nature inside the government? Perhaps in this case since the

government is both pressured by various interest groups, and the heightened number of

Uber and Grab patrons among the first class and middle/working class.

5. There is also a need for a regulation, but how will government know, without the collective

participation of inputs from various interest groups?


LITERATURE REVIEW

This study will review on regulation theories and the link on interest group participation in

the creation of the structure of regulation. This includes the principal-agent theory and the policy

subsystems theory. This is also interested on the specific cases that show the integration of interest

groups’ input to the policymaking procedures (discussing interest groups and the theories related to

their actions, i.e. rational choice and how they represent political, economic, and social interests).

The regulatory frameworks done by other countries on Uber/Grab and the procedure of its creation

would also be reviewed.

THEORETICAL FRAMEWORK

This study will utilize the theory integrated by Barch (2014) on the interest group influence

over regulatory policy. This includes the influence of complexity on interest group influence, the

influence of salience in interest group influences, patterns of influence in a technocratic subsystem,

strong principal control system. This will further support the understanding on the perception of

interest group influence and the use of interest group information. For instance, Furlong and Kerwin

(2004) have found the relevance of interest group participation to the building of the regulatory

framework.

This study will then build on the comprehensive usage of the model by Barch, with the use

of the economic theory of regulation by Stigler (1971), the interest group and predatory capture

(Roberts and Kurtenbach, 1998 & Etzioni, 2009), and theories of biased pluralism (Gilens & Page,

2014) .
PROPOSED RESEARCH DESIGN, METHODS/PROCEDURES

The research design will be built on research done into the use of both quantitative and

qualitative methods. This discussion of the methodology will present some of the specific tools and

methods to be used.

The Interest Groups of Uber and Grab and their Influences

The study will conduct a case research to be able to have an in-depth investigation of the

problem. The data may be collected using a combination of interviews, personal observations, and

internal (within Department of Transportation, Uber, and Grab documents) and external (newspaper

clippings). This is to discover a wide variety of social, cultural, and political factors related.

The Effectivity of Interest Groups in Policymaking

The research will have a survey of drivers and clients of both Uber and Grab on their inputs

as representative of two various interest groups. Key informant interviews will also be done from

the economic groups, and from Uber and Grab. Interestingly, the inputs of the the drivers and

clients will also be formatted for a separate survey for the regulators and the Congress (committee

on transportation) and key informant interviews. The results of two group surveys will then be

analyze in terms of their relationship on the strength of the influence of each interest to the

decision-making of the government. This will then use regression and correlation to test the

relationship of a specific interest to the consideration from the government.

The Effectiveness of Interest Groups in Previous Policymaking

This will use historical and content analysis to measure the strength of interest groups in

previous policies. This will then be verified to some congress decision-making documents related to

transport regulation.
BIBLIOGRAPHY

Azevedo, F. & Maciejeski M. (2015). Social, Economic and Legal Consequences of Uber and

Similar Transportation Network Companies (TNCs). DG IPOL Policy Department B-

Structural and Cohesion Policies 1(7). doi:10.2861/022293

Barch, M. (2014). Interest group participation in regulatory policymaking(Doctoral dissertation,

Indiana University).

Etzioni, A. (2009). The capture theory of regulations—Revisited. Society,46(4), 319-323.

Furlong, S. R., & Kerwin, C. M. (2004). Interest group participation in rule making: A decade of

change. Journal of Public Administration Research and Theory, 15(3), 353-370.

Gilens, M., & Page, B. I. (2014). Testing theories of American politics: Elites, interest groups, and

average citizens. Perspectives on politics, 12(3), 564-581.

Katz, V. (2015). Regulating the sharing economy. Berkeley Tech. LJ, 30, 1067. Retrieved August

20, 2017 from : http://scholarship.law.berkeley.edu/btlj/ vol30/ iss4/18

Meier, K. J. (1988). The political economy of regulation: The case of insurance. Suny Press.

Ngo, V. (2015). Transportation Network Companies and the Ridesourcing Industry: A Review of

Impacts and Emerging Regulatory Frameworks for Uber. The University of British

Columbia, School of Community and Regional Planning. Public Report. Retrieved August

16, 2017, from https://open.library.ubc.ca/media/stream/pdf/42591/1.0220795

Philippine News Agency (2017 July 19). Lawmakers want to regulate Uber, Grab. Republic of the

Philippines. Retrieved August 31, 2017 from http://www.pna.gov.ph/articles/1001698

Roberts, R. W., & Kurtenbach, J. M. (1998). State regulation and professional accounting

educational reforms: An empirical test of regulatory capture theory. Journal of Accounting

and Public Policy, 17(3), 209-226.

Stigler, G. J. (1971). The theory of economic regulation. The Bell journal of economics and

management science, 3-21.

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