2 Taxi Medallions Sell for $1 Million Each
cityroom.blogs.nytimes.com
cityroom.blogs.nytimes.com
There are plenty of examples of cities that have abandoned the monopoly approach to supply and price of taxis. One example is every city and town across New Zealand.
Here's what it looks like: The entry price for a new cab is low - a decent car that passes muster with regular inspections, a clean sheet for the driver and so on. There are no huge fees.
There are a lot more cabs than before deregulation (2 to 3 times). The difference is that even after a major event you can still catch a cab. That in turn means you are less likely to drive, as you know you can get a cab safely, and so those extra cabs get used.
There are a large range of cab companies - from unmarked 'limos' to branded Corporate Cabs, large regional players and then a host of cheap and cheerful players. My favorite right now is Green Cabs, which has a 100% hybrid fleet and charges less - as they save 30-70% on gasoline versus the v6 powered monster cars the traditional cab companies have.
You can pick the car you want when exiting an airport, and there are no monopoly suppliers at airports, though some pay to have better positions. There is no mandate to take the one in front, and people don't.
Prices are set by each company and registered with the government. They cannot change them each day, and they have to apply to all cars. It does mean that some firms are more expensive (nicer cars, better service) and some are cheaper. There are also some that are better for short trips (low flag fall, hugh cost per Km/Mile) and others for longer trips.
We have a market based economy for cabbies, and we as consumers and the cabbies (by the numbers) are much better off. How can anyone, especially Wall St, credibly argue for free markets when there are mandated monopolies under their noses? [edited to remove arbitrary attack on right wing]
Hillary Clinton used to be a senator for the state of New York and now is the Secretary of State of the US. Neither of these roles have much to do with New York City government.
I'm not sure of the details and precisely why the taxi industry has so much power. (Maybe they have carefully compiled dossiers on the late-night trips of every politician in the city...)
But medallion owners care. If someone says they will end the program, they will vote like crazy against it. They will also tell the drivers (who might actually stand to gain if they could get their own medallions at a lower cost) that margins will drop, cheap competitors will move in, safety standards will drop, and so on.
The same is true of sugar imports, patent laws, retrospective copyright extensions, and other issues which have a few people who care about it, and a lot who don't even understand it.
OK, you could say that deregulation is what the right (or libertarians) stands for. But sometimes it works the other way - regulations and subsidies can arguably help the broader community while hurting a few special interest groups.
If you ask the owner of a cab company about Wall St bailouts they are probably against it because "it's not a free market" whereas if you ask them about taxi cab medallions they'll tell you it's about consumer protection and is an appropriate amount of regulation necessary similar to basic health codes for restaurants.
People talk their book, end of story. In general, welfare recipients want more welfare, governments want more government, and corporations want more corporations. It's just the evolutionary nature of organizations that propagate themselves. Organizations that are not self-propagating tend to die out once their usefulness has passed. (eg. Why do we still have a March of Dimes?)
I guess there's an argument to be made for allowing more flexible pricing. Keeping the requirement that prices should be public might be worth it, though.
>> Only "medallion taxicabs," those painted in distinctive yellow and regulated by the TLC, are permitted to pick up passengers in response to a street hail. The TLC also regulates and licenses for-hire vehicles, known as “car services” or “livery cabs,” which are prohibited from picking up street hails (although this rule is less often enforced in the boroughs outside Manhattan)[44] and are supposed to pick up only those customers who have called the car service's dispatcher and requested a car.
Those $1m medallions are just an iPhone (or mobile web) app away from a crash. In fact, I think there's already some company that does this.
I speed dial Eastland Car Service in Brooklyn and call it a night (excuse the pun.)
*Ring*
"Eastland."
"Can I have a car to the Moon please?"
"5 minutes."
Click.
Edit: Funny story, once I was picked up by a brand new Porsche Cayenne. Pretty good for an $8 cab.
You don't, but it makes the entire stack easier for everybody involved.
I don't live in a NYC, I live in Phoenix, but we have our own problems that necessitate taxicabs (urban sprawl, meaning if I going to beers-with-friends, I'm paying for a cab).
Sitting in the bar and pressing a button on my phone to hail a cab would be awesome.
The management software on the backend finds the closest 5 available drivers, lets them bid on me, and whichever one bids the lowest takes me home.
Honestly, you could take it a step further and do AirBNB for car services. Give me the ability to rate drivers and their cars, and then let drivers bid on me where I get to choose which one takes me home.
As a customer, I don't have to muck about in some app, especially while buzzed, to get a car. I call and get a real person and am done in 5 seconds. No app can do that.
Admittedly, it works because they have a lot of drivers. I can see how this becomes a problem when you have many smaller companies and you need to hail the closest. Thanks for the perspective.
Disclaimer: My startup (RideCell) builds automatic request/dispatch/tracking technology for fleets.
The word "medallion" carries an emotional charge (it's archaic), but taxi medallions aren't all that different from commercial zoning restrictions.
Regardless of why they were introduced, medallions do more than restrict competition; they also give medallionholders something to lose if they abuse their license. Were barriers to entry eliminated, unscrupulous companies could put unsafe cabs on the road and simply fold up shop and reincorporate when anything bad happened.
Ironically, the sky-high price of NYC medallions is a result of a free-market spin on taxi licenses: taxi permits in NYC can be freely bought and sold (like seats on a stock exchange).
Cities have experimented with taxi deregulation and the results have been mixed; in particular, taxi deregulation has been reported not to improve driver salaries.
It's also important to remember that street taxi service is not a particularly efficient market system. In the norms of the taxi market, you cannot in fact be choosy about what cab picks you up (even if you could, there's virtually no information available to you when a cab pulls up). It's thus hard to argue that street taxi competition would be that beneficial to consumers.
On the other hand, because the street taxi market is also characterized by lots of externalized costs (pollution, traffic, hit-and-run accidents, etc), one way consumers could conceivably benefit from "competition" among cab drivers would be to auction permits off, and increase the cost of entry to the taxi market.
This is not true. In the usual situation where the cab operator leases the medallion one cannot touch the medallion to satisfy judgements against the cab operator. At least that's how things were when I studied this many years ago. So this is no reason to keep medallions.
I agree that completely deregulating taxis is not the right way. But there is a sane way to regulate this. Just require safety and quality inspections, require taxi companies to hold a certain minimum insurance or financial responsibility fund, perhaps even put in minimum driver salary requirements and that is pretty much it.
The number of actual taxis on the streets will limit itself by the forces of the free market.
It is possible to regulate for safety (with criminal penalties for breach of regulation, or possibly a bond which can be forfeited to the city, although the latter creates a barrier to entry and probably isn't a good approach) without creating artificial scarcity.
Commercial zoning regulations are quite different, because they relate to land, which is a naturally scarce resource; the scarcity is not created artificially by the government to keep the supply down and prop up special interest groups by keeping competitors out of the market.
- Call in a taxi (long wait time, high chance of a no-show)
- Hail a taxi (sometimes impossible, wait times can be close to 20 minutes in some parts of town)
- Use homobiles (might get picked up by a smoker's car or someone carrying a dog, wait times can exceed 45 minutes)
- Use Uber (more expensive, but very low wait time)
Uber is the clear choice almost every time now, but if there were enough taxis there would be a reason for them to show up when you called, and a reason for the cab companies to invest in an app as good as Uber's.
Even less-nice hotels are good for cabs if they have a notable bar. E.g., the W usually has very quick service, but it's a hike from anywhere good.
After your first few months in SF, you develop a skill for sniffing out cabs. Good luck outside FiDi, Union Square, Market Street, Fisherman's Wharf and the feeder streets through North Beach, and the top of Nob Hill. There are a lot of cabs in the Castro, the Mission, and Cow Hollow, but you need to be ruthless in leapfrogging other parties.
That said, just use Uber. Don't bother with Cabulous and the like, because the inbound driver will flake if he's hailed and can drop the meter sooner.
New York (Manhattan) is a lot better- plus there are tons of gypsy cabs (non-medallion) that you can get in when you are in a pinch.
Chicago is the best U.S. city I have been in for cabs. Short wait if you call, but usually no problem hailing one from just about anywhere, anytime. Even in the rain. It's so easy, I'm not sure why.
Why don't we just make the responsible people personally liable instead?
The technology to do this already exists. If taxi drivers could see where the demand is, and riders could see feedback on drivers, it would solve this problem. Of course technology alone is not enough. To achieve this, you'd need to disrupt the status quo, a part of which is laws that disallow "street hails" of taxis that don't have medallions.
This is what happend in Israel, when government issued many new taxi licenses and price fell from ~ $75K to ~ $25K.
I don't understand it. The taxi industry is a huge and powerful lobby which manages to twist the law in its favour in just about every first-world city on Earth. I don't know how they do it, but they do.
I really don't see where that much value is, beyond blocking potential competitors from the market.
There are small towns across the US whose mayors have more power than the mayor and council of NYC.
Does anyone know why that's the case? Do Uber drivers consistently make more than cab drivers? Where does the money go?