as an essential public service. Partly for this reason, the government established rules governing how much the hackneys could charge, where they could travel, and how many of them could provide service. The degree to which such licensing rules actually benefited urban travelers by ensuring sufficient service and fair pricing rather than benefiting the hackney operators by protecting them from competition is unclear, although the former benefits were their ostensible purpose.
Similar regulations were applied to successive forms of horse-drawn urban transportation. One such successor, the omnibus, was introduced in London in the early 1800s. Because it provided fixed-route and scheduled service, could carry up to 20 passengers, and was thus affordable to more people than the hackney, this wagon-like vehicle became immensely popular in Europe and to a lesser extent in the largest cities of the United States (Smerk 1992, 6–7). Like the hackney operators, those offering omnibus service were subject to public service regulations governing the fares they could charge, routes they could ply, and kinds of services they could offer.
The decision to regulate the private suppliers of urban transportation has had lasting effects. The early regulations were based on the principle that for-hire passenger transportation in cities was important enough to the public that government intervention was warranted to ensure sufficient and stable service. The way taxicabs are regulated today is a legacy of the early hackney rules.1 Perhaps more important, however, the early regulatory schemes established the basic model of transit service provision that would come to predominate in the United States through the first half of the 20th century. In this joint public-private model, the public sector sets the standards for transit service, while the private sector owns and operates the service.
Indeed, urban transit regulation, from its earliest applications, can be viewed as a form of public and private contracting. The agreement is straightforward in principle. The public is promised enhanced safety through licensing and inspection of vehicles and drivers, protection from exploitive fares, and a certain steadiness of service. In return, the regulated operators receive a degree of economic protection through limits on competitive entry and pricing (Meyer et al. 1965, 353–359).
A reason for regulating the early hackney and omnibus services was that relative ease of entry into the business would lead to an overabundance of willing suppliers. Neither service required large capital investments or specialized