1. Once they are big enough they can sell at loss or razor thin margins at the expense of employees(see Amazon) which in itself becomes a barrier to entrry. Most of the new small competition will die out during this phase of being discovered by customers or will face a constant cash flow crisis since incumbent can wait them out.
2. Do not underestimate the power of inertia. Let's take an example of Microsoft. For how many years IE was left to rot once they destroyed Mozilla?
Did Microsoft go out of business or fail in anyways? I guess no and don't forget it took another behemoth Google to fight the it out in the form of first supporting Mozilla and then coming up with their own browser.
> Taxi medallions are not controlled by small businesses. With their prices (before Uber), they can't be. Small business doesn't have that kind of money.
Probably they are their own local monopolies not but how replacing them with with one big all encompassing entity is a solution?
This is an anecdote but it happened to me few months back. I ordered an Uber but when it didn't arrive in time, I canceled it. Next time when I took Uber they just added a charge to my current bill silently without any intimation. I had to call them and go though half an hour of explaining. After that only they agreed to adjust the amount in my next bill. There was no option to get my cash back if I wanted my money. In my view this is no different than taxi nexus and once they are the o
I don't believe such strategy can work. Screwing you customers is an extremely bad business practice, and it only works if your competition faces very high entry barriers or prohibited altogether, e.g. by law or regulation. Otherwise you'd either have to lower your prices each time new startup comes around, or you quickly get your market share eaten, as it happens now to taxi monopoly.
> At best we will end up replacing many small businesses
Taxi medallions are not controlled by small businesses. With their prices (before Uber), they can't be. Small business doesn't have that kind of money.