An Institutional Framework for Regulating New Business Models: A Case Study of Application-based Transportation

Business model innovation is application of a different business model to an existing economic sector, which can lead to elimination of businesses in sectors and will change the governance. This shift, raises the question of the appropriateness of existing regulation and highlights need to re-design the regulatory system, considering common-pool resources. The solution for regulating new businesses in order to meet the interests of the general public, existing and new businesses, is polycentric governance and to recognize the role of nongovernmentals. This paper provides a framework for regulation of new business models using the Ostrom framework and the application-based transportation has been selected as the case-study. The findings suggest that the centralization of national governance within the Ministry of the Interior at the constitutional level and oversight by the union, coupled with local governance at the municipal level at the collective choice level, would be an appropriate framework.