I think there are two main reasons. One is to protect the safety of passengers. Suppose you land at the
airport in Mongolia and some guy comes up and says "here's my taxi; get in; I have a good price". How do
you know he is legitimate? The other reason is to regulate the price. In Germany, for instance, prices
might vary from city to city, but are the same within a city (though they might depend on the time of
day, day of week, season etc). The alternative would be competition, of course, but in practice when hailing
a cab how can you compare prices? Talking to several cabbies lined up at the airport would cause delay in an
area where there is already delay and congestion.

So, at least in Germany, get in a licensed cab and you can be reasonably sure that you are safe and won't
be ripped off.