It's incredible to see cities that still do this. It means the investment goes into the medallion, the cabs can be crappy and the drivers don't get a fair return (the medallion owner does).
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]
How can the right wing argue for free markets when there are mandated monopolies right under their noses? Uhh... The right wing is NOT who's in charge of New York City. NYC as a whole is firmly in the camp of the left wing, democrats, Hilary Clinton and friends. It's not even close.
The mayor of New York City was a republican when first elected and is now an independent. He is a billionaire who has always touted his business expertise as his biggest advantage. So I think the original poster's claim kind of stands if he just replaces "right wing" with Bloomberg.
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.
Bloomberg is attempting to clip the wings of the taxi industry, but he's having a hard time of it.
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...)
It's nothing to do with left vs. right. It's people with vested interests. For most people, getting a taxi is a minor annoyance. They don't know what any candidates' standing on the issue is, and don't even know how the issue effects them. Why would they consider it when they go to the polls?
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.
The right wing can't argue for anything, it doesn't exist. The various people that compose the right (and left, and center) wing say specific things which are often at odds with each other. The organizations and people are generally talking their book rather than preaching a consistent ideology.
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?)
> 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.
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.
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.
I've spoken to Eastland drivers -- I've been riding with them for years -- and thats exactly what they do, minus the complexity. They announce an address over radio and the closest driver takes it. I don't remember how they enforce this policy in the company (sorry), but they do and it works.
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.
Speak for yourself; I find it far faster and easier to open an app and press a button than call a phone number and try to verbally explain my location to some guy with a thick accent. When you add in the fact that Uber also takes care of payment and tip, which is another hassle at the end of the trip, it's a far better experience.
I've used Uber a couple times in NYC now. Biggest problems for me: It's pricey compared to a normal cab; currently Manhattan-only (for pickups); there's generally a 10-15 minute wait, in which time I generally could've caught a normal cab. But seriously, Uber is fantastic.
It would be interesting to see a breakdown of where the money goes when I take a cab ride. What % goes the the actual guy doing the driving? What % to pay for the vehicle? What % goes to the amortized cost of the medallion?
You too can own a piece of the taxi medallions in New York (or use them as collateral for loans, at least). Medallion Financial Corp is publicly traded (Nasdaq: TAXI).
For now. Uber won't break their business model alone. They will probably maintain a premium for quality.
But with the precedent set, other 'brands' will eventually jump in and attempt to duplicate the technology and offer taxi-like service for similar cost, without the medallions.
By most accounts, Uber has built a great customer experience. However their technology is not really an exclusive secret sauce. The key in disrupting taxis will likely be scaling a private operation like Uber to where it costs as much or less than taxis currently do, at least on average (hard to do), or to co-opt the current taxi/limo infrastructure to improve the customer's experience and automate things (also not easy). The technology is not a piece of cake, but not rocket science either, and is certainly not the key to the kingdom.
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.
"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."
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.
The problem with your argument is that you are conflating the artificial scarcity aspect of this type of regime with the public interest regulation side of things.
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.
Licenses and zoning permits are routinely structured to limit the number of certain kinds of businesses. The ostensible intent isn't to limit competition or protect incumbents, but that's obviously part of the ultimate impact.
In the US Commercial zoning regulations relate to far more than simple land scarcity. Public infrastructure, pollution, competition, and bribes all play roles in how zoning happens in the US.
The benefit for consumers is that there are enough taxis to go around. If I need to get somewhere in SF I have these choices:
- 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.
Go to a hotel. It's the only reliable way to catch a cab in SF. Choose nicer hotels and if the pickings are still slim, $5 to the doorman will resolve the problem pretty quickly.
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.
I feel so bad for people that live in San Francisco. It really has the worst taxi situation. If you call a cab you are guaranteed a long wait, plus there is a HUGE chance of no show. Forget trying to hail a cab, that just doesn't happen. Ever.
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.
> 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.
Why don't we just make the responsible people personally liable instead?
"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)."
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.
The price appreciation is artificial. It's disconnected from economic reality.
All it takes for the new Mayor of NYC to decide to issue thousands of new medallions and the price will fall.
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.
Melbourne Airport is on the outer fringe of the city and there's always a push to get public transport to the airport, in the form of light rail - a taxi to the CBD is north of $30, from memory. The land is there, the public support is there, but the taxi lobby keeps killing it every time. I've never understood where they get their power from.
They use custom license plates instead of medallions, but the effect is the same. I think a set of Melbourne taxi plates goes for around $500k these days - a quick search just found "a bargain - 485k!".
I really don't see where that much value is, beyond blocking potential competitors from the market.
The State of NY can veto pretty much anything the City of New York decides to do. Right now a bill to reform the livery car business to allow street hails outside of Manhattan is sitting in Albany.
There are small towns across the US whose mayors have more power than the mayor and council of NYC.
With the super high cost of these Medallions, it seems like services like Uber should be able to compete on price, yet some how they're always more expensive than cabs.
Does anyone know why that's the case? Do Uber drivers consistently make more than cab drivers? Where does the money go?
The internet is great at killing business models where middlemen make the lion share of profit. Like Taxi medallion holders.
Über and services like it will destroy their margins eventually, and thus push down the price of medallions.
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]