Everyone has stories to tell, good and bad, about New York cabbies. However, the largely untold
story is that New York’s taxis (like those of most other major cities) are highly regulated. Minimum
standards of service and fares are set by a city commission. Even more important, this commission
directly limits the number of taxis via its licensing authority. By law, each authorized “yellow” cab
must carry a medallion. The number of medallions has been nearly unchanged for 65 years. In
1937, the number for New York City was 11,787. After “token” increases in 1996 and 2004, today,
there are 12,487 licensed taxis!
The commission is caught in a continuous crossfire from consumer advocates, government
officials, and representatives of taxi companies and drivers. Are fares too high or not high enough?
Should additional medallions be issued, or would this be bad for the industry? Does the industry
need tighter regulation, or is the regulatory burden already too great? As you read this chapter,
think about the ways in which an economic analysis could be applied to address these questions.319
CHAPTER 8 Monopoly
CHAPTER 8 Monopoly
Monopoly: the earnings of many in the hands of one.
EUGENEDEBSNew York City’s
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