1. This report examines the crisis facing Korea’s taxi service industry in light of the rapid development of autonomous driving (AD) technology and global rise of the autonomous taxi market. It then explores potential reform measures to address these challenges. 

2. The global autonomous taxi market is projected to grow at an average annual rate exceeding 50 percent over the next decade. With the market’s strong growth potential and significant linkages to related industries, countries such as the United States and China, boasting technological dominance in many areas of innovation, are investing heavily and expanding commercial services. Korea, in contrast, remains dependent on conventional taxi services, with autonomous taxis having not yet undergone full-scale testing. 

3. Given the characteristics of the self-driving taxi industry, where economies of scale play a significant role, it is highly likely that existing small-scale taxi operators will be unable to participate in the business model once self-driving taxis become commercialized, which could ultimately result in substantial losses for those engaged in the traditional taxi industry. Yet it will be difficult to block the entry of autonomous taxis through regulation alone. The need to strengthen national competitiveness, the aging workforce of taxi drivers, and consumer demand all point to the eventual necessity of adopting autonomous taxis in Korea. 4. Korea must therefore prepare structural reform measures that both ease regulations to enable the entry of autonomous taxis and reduce the share of individual taxis through appropriate compensation schemes in order to minimize the impact on existing actors. 

    ① To secure entry channels for autonomous taxis, it is crucial to relax the cap on taxi licenses while also streamlining detailed regulations such as those governing testing.

     ② An acceptable exit plan must be created for current taxi workers. This includes establishing a social fund to buy back and retire licenses at fair value, along with additional compensation measures such as profit-sharing schemes. * Australia’s successful license buyback program offers a useful reference point. 

    ③ Given Korea’s existing public transportation infrastructure and testing environment and the scale of compensation funds required, it would be most effective to launch pilot reforms in small and mid-sized cities and then expand them gradually nationwide.