Many cities (and airports) have official taxi monopolies. They limit the number of cabs in the city, and regulate them, typically by issuing “medallions” to cabs or drivers or licences to companies. The most famous systems are in London and New York, but they are in many other places. In New York, the medallions were created earlier in the century, and have stayed fixed in number for decades after declining from their post-creation peak. The medallion is a goldmine for its “owner.” Because NY medallions can be bought and sold, recently they have changed hands at auction for around $300,000. That 300K medallion allows a cab to be painted yellow, and to pick up people hailing cabs in the street. It’s illegal for ordinary cars to do this. Medallion owners lease the combination of cab and medallion for $60 to $80 for a 7-9 hour shift, I believe.

Here in San Francisco, the medallions are not transferable, and in theory are only issued (after a wait of a decade or more) to working cab drivers, who must put in about 160 4-hour shifts per year. After that, they can and do rent out their medallion to other drivers, for a more modest rental income of about $2,000 per month.

On the surface, this seems ridiculous. Why do we even need a government monopoly on taxis, and why should this monopoly just be a state-granted goldmine for those who get their hands on it? This is a complex issue, and if you search for essays on taxi medallions and monopoly systems you will find various arguments pro and con. What I want to get into here is whether some of those arguments might be ripe for change, in our new high-tech world of computer networks, GPSs and cell phones.

In most cities, there are more competitive markets for “car services” which you call for an appointment. They are not allowed to pick up hailing passengers, though a study in Manhattan found that they do — 2 of every 5 cars responding to a hail were licenced car services doing so unlawfully.  read more »