A Silly Monopoly

By: Dr. Lynn Reaser

San-Diego-TaxiSince 1984, the City of San Diego has capped the number of taxis that can operate on the streets. To operate a taxi, you have to purchase one of a limited number of “medallions.” Medallions were last issued in 2007 at which time only about 25 were offered at a price of about $3,000 each.

Making the taxi industry into a monopoly by selling a limited number of medallions makes no economic sense (except if you are a taxi driver owning a medallion.) Restricting the number of taxis in the face of strong demand artificially drives up prices to the detriment of the public. It is no surprise that medallion holders are selling those monopoly rights in the “gray market” at prices that now range about $10,000, or around three times the amount of the medallion’s original cost. It is also no surprise or that cheaper alternatives, such as Uber and Lyft, are appearing.

If one is worried about safety, taxi drivers or “taxi-like” drivers can be forced to carry insurance, while meeting certain safety requirements for their vehicles and themselves. This monopoly should have never been created. It now needs to end.

Image Credit: Legalpad


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