Why There Are Taxi Medallions

While the various internet based taxicab firms are generally dismissive of regulation in their pursuit of “disruption”, they have particular contempt to things like medallion systems that limit the number of taxis in cities.

The justification for medallion systems has always been that allowing unlimited taxis would create more traffic congestion, while entities like Uber and Lyft have always maintained that their services would reduce congestion.

Well, the studies have come in, and the justification for medallions has been proved right:

Despite being heralded as services that will reduce congestion on our streets, ride-hailing companies like Uber and Lyft actually are making traffic problems worse, a new study from Boston’s Northeastern University has revealed.

The study showed that in many cities rather than encouraging commuters to leave their own personal vehicles for shared rides, the apps are instead siphoning ridership from higher-capacity transportation options such as buses and subways. The report also found that riders do not use the apps to connect to existing public transportation lines, as Uber founder Travis Kalanick has suggested, but primarily to travel directly to their final destinations.

This is not at all surprising: A car on the road is a car on the road is a car on the road.

While the Uber and Lyft Gypsy cab services might open up a few parking spaces, they have the effect of increasing the numbers of cars driving at any given time.

I am not necessarily a fan of medallion systems to limit the numbers of taxis on the streets, it converts a permit created for the public good into a negotiable financial instrument, I object to private profit being created through regulatory arbitrage in this manner, but it is clear that cars for hire need to be limited to serve the public good.

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