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The only reason that taxis have been able to achieve any decent utilization at all is the medallion system which greatly restricts supply. Without artificially constraining supply at the expense of consumer demand, taxi utilization would be abysmal.



It doesn't really make sense to assume that utilization would be abysmal without constraining supply. The people who operate taxis are rational actors. People who operate taxis will simply exit (or not enter) the business if they're sitting around idle and not making money.


The problem is that vehicles in general cause negative externalities that the people driving them don't pay for, namely: Traffic congestion, localized pollution, and global pollution (CO2). FHVs are definitely susceptible to this phenomenon. Here in NYC we're having to implement a congestion tax in Manhattan to reduce the number of vehicles on the roads.

Admittedly, it is probably better to charge all vehicles for entering the most congested areas by their size (i.e. trucks pay more) than it is to pick and choose by artificially limiting just some types of vehicles while allowing unlimited numbers of others.


What does this have to do with taxis vs Uber? Did you mean to post this comment in some other thread?


The point is that you can't just let the market sort it out because the market doesn't care about negative externalities. There are legitimate reasons to artificially constrain the supply, i.e. implement a medallion system. This comment thread which you've wandered into is about the taxi medallion system.




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