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If NYC politics were not hopelessly corrupt, they could at least open up the outer boroughs (not worth the trouble to taxi drivers paying off loans for $1 million medallions).

Outer-borough taxi medallions might be priced at $4,000– high enough to deter holders from forfeiting them, but low enough to make forfeiture a credible threat. Most importantly, an *unlimited* supply of medallions should be available on demand at the fixed price of $4,000, and the city would be pledged to buy back any number of medallions at $3,500 apiece.

I wonder how many actual drivers own their medallions? It was my impression that a few companies hold the majority of them and simply rent them out. Offering those companies a buyout or tax-out would not hurt individual drivers much, depending on what it was replaced with.

Occupy the Taxi Board!

Economics of artificial scarcity managed by a cartel.

This is driving for hire, something that any 18 year old without even a high-school diploma can perform quite satisfactorily.
A million dollar investment requires $50,000-100,000 minimum return per year for the corporation with a million dollars capital tied up in the medallion. This likely doubles the operational expense of the livery service and the fares charged. New Yorkers are paying dearly for the bizarre restriction on what should be an open market.

Has anyone worked out a fair way to put an end to the medallion system? Suppose, for example, that the requirement to have a medallion were abolished and that anyone could operate a tax subject only to safety requirements for the cab, appropriate driver’s license, etc. This would benefit consumers by eliminating the artificial scarcity and it would also greatly reduce the barrier to entry, but it would also destroy the value of the medallions. In the case of those who purchased them long ago, this wouldn’t be so bad as they will have purchased them for relatively little and will have amortized much of the cost, but for recent purchasers it would represent a huge loss. If the answer is for the city to buy the medallions at market rate, that would seem to be quite unfair to the taxpayer.

Not only would allowing an open market in taxi services destroy the value of the medallions, more importantly for NYC consumers and residents, it would clog the streets even further. I don’t get much out of a cheaper cab fare if the roads are so busy that I’m always going to save time by taking the subway or even walking to my destination. It’s a problem similar to that of the food cart fad: if everyone wants to take up some of New York’s (particularly Manhattan’s) limited street real estate, how do we apportion it? Auctioned licenses whose revenue benefits the city that monitors the businesses for safety and keeps those streets safe and clean seem the best method.

However, given the near-impossibility of finding a cab in the less trendy neighborhoods (I recently had to call a jitney in order to get from Crown Heights, Brooklyn to JFK), and those neighborhoods’ relatively light traffic, I think Hugo might be on to something in having a separate and probably cheaper medallion system for taxis that stick to picking up only in those neighborhoods and from the airports. This does mean that such taxis will waste their time and gas when they have to get back from a midtown dropoff to one of their licensed neighborhoods, but I think it’s necessary to prevent Manhattan from being completely overrun.