Comment by jessriedel | Hacker News Reader

Comment by jessriedel | Hacker News Reader

So I can understand the argument for taxi regulation and prohibiting unlicensed taxis: when I hail a taxi for a 5 minutes drive, I don't want to expend resources looking at competitors, checking to make sure the meter is legit, checking proof of insurance, etc. Since most people want the same thing out of a taxi (as opposed to, say, buying a car), it makes sense for a centralized government agency to do some regulating.

But what is the rationale for limiting the number of medallions? Why not just allow anyone who wants to become licensed to do so, while charging a fee which covers the cost of the licencing process?

The OP's article lists the obvious dangers of completely deregulating, but it doesn't explain the cap on medallions.

(Please, no comments about "because the taxi cartels control the government!". I understand the incentives for existing taxis to erect barriers to the market. I'm more interesting in the rationale of those who argue that a limited number of medallions is in the public interest.)

Well, on the progressive side, when they want rent they argue that market prices are "unfairly low" (or high). Creating artificial scarcity is one way to inflate prices to "fair" levels, e.g. "living wages":

>Ward 1 Councilman Jim Graham introduced legislation Tuesday to limit the number of taxicabs in D.C. through either a medallion system, like ones used in New York City and Chicago, or a certification system. [...] A glut of drivers could jeopardize the chances of any cabbies making an adequate living, Graham has said.

http://www.washingtonexaminer.com/local/Cap-on-D_C_-cabs-sug...

...Though in this particular case the backstory turned out to be "the taxi cartels control the government".

http://www.washingtontimes.com/news/2009/sep/24/dc-council-m...

http://www.washingtonexaminer.com/local/crime/Ethiopian-comm...

Thanks! This is the kind of example argument I was looking for.

(And of course it makes terrible economic sense. If the city wanted to transfer wealth to the taxi drivers from other citizens, it would be more efficient to just have a transparent tax and payment system, rather than a hidden cost through a monopoly. But I figure I don't have to convince you of that...)

> The experience of other cities over many years has shown that open-entry "deregulation" of taxis is poor public policy. . . . In a nutshell, the problem is that the capital costs of entering the taxi business are low. In an unregulated market, anyone with the price of a used car can enter the business. While this may sound good to free-market fans, experience with taxis has shown that quality goes down, prices go up, and public safety is compromised.

So there you have it: the taxi cartels want regulation to keep prices low.

>quality goes down, prices go up, and public safety is compromised

That jumped out at me too; I can't imagine how deregulation would raise prices for consumers. I'd love to see a cite for that.

I would have believed "too many taxis == too much traffic," AKA tragedy of the commons, but not this.

> the capital costs of entering the taxi business are low.

Is what I suspect is the key point. Because capital costs are so low, it's easy for anyone to get into the business. Because it's easy to get into the business, you end up with lots of turnover as people come in looking to charge high rates, get tired of it, and move on to some other job.

Medallions artificially raise the capital costs involved in becoming a Taxi driver, and therefore make people more likely to continue as drivers, since they want to recoup their initial investment, and it's not trivial to do so.

> Because it's easy to get into the business,...charge high rates, get tired of it, and move on to some other job.

This doesn't follow at all. All other things being equal, barriers to entry drive prices up, not down. If you want to argue that taxis are different than most other businesses in this respect, you're going to have to explain why.

I'm providing a hypothesis to support the data they claim exist (and I'm inclined to trust that it exists.) Unless you can provide information on case studies where deregulation has provided benefits, I'm going to trust the OP.

Data > intuition.

Also, alternate hypothesis: cabs are less likely to use meters when things are deregulated, so most people don't know what they're paying for, and overpay.

Check the prices on ubercab versus regulated taxis.

2 mile: $7.15 v $17.80 5 mile: $13.90 v $32.50 10 mile: $25.15 v $57.00

idling: $0.45 v $1.25

The expensive ones are the less regulated cars of ubercab.

And for what it's worth, in New York, the only time I've had bad experiences with Taxis were times I waved down a livery, or got another unlicensed taxi.

The reason seems to be to make traffic manageable.

It's similar to the idea of cap-and-trade pollution regulation. Each individual producer profits with pollution, but people believe the environment can only sustain some level, after which we have serious harm to both polluters and non-polluters. This environmental capacity is analogous to SF's (assessment of) traffic capacity.

I don't know why SF doesn't allow trading or transferring the medallion, the way many other cities do.

Seems like a red herring to me. Taxis aren't by any means the majority of the traffic in SF, so I doubt having more of them would cause a major issue. If anything, it would make things more manageable by easing the parking situation (since prices would be lower and people would not need to drive).

There are too few taxis in SF today. The city has been adding medallions[1]; unfortunately the years-old plan to add medallions has been slowed by implementation issues and controversy around details.

However, my point above was more theoretical. There is still some number beyond which each additional driver would have a positive incentive to enter the market, but the net social benefit would be negative (i.e. tragedy of the commons). So it still is reasonable to cap medallions in large, dense cities.

[1] http://www.sfexaminer.com/local/Scaled-down-plan-for-taxi-me...

Difficulty in regulating at scale? A license is more than just a badge that means "I paid a fee."

>Difficulty in regulating at scale?

The per-licence cost of regulating should go down with increased scale (unless there's something really surprising I'm not considering).

>A license is more than just a badge that means "I paid a fee."

I don't understand what you mean here. I said the licence should reflect the cost to the city for doing the regulating. And the regulating should include stuff like ensuring the meters work, checking insurance, etc.

Maybe an extra 5000 cars on the road in the most traffic-dense parts of the city isn't ideal.

But is that actually an argument that is given? Is there data showing that taxis are a significant contributor to congestion?

If this were a real problem, it would be better to estimate the marginal cost to the city for having an extra car on the road for an extra day (or minute or whatever) and charge that. Then, let the market decide how that affects the number of taxis. (Also, if this were true, it would be an argument for charging everyone, not just taxis, to drive in the city.)

If there is demand for taxi regulation, there is an incentive for entrepreneurs to supply it (e.g. quality labels).

The need for positive freedom does not proof the legitimacy of positive rights.

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