In New York the medallion system was introduced when the supply of taxis exceeded demand. Medallions were a way to control supply and artificially inflate fares, which were also regulated. Unfortunately the supply of medallions has not kept pace with demand which caused medallion prices to skyrocket from ~$3000 ($50k in 2017 money) at their introduction to over one million dollars in the mid 2000s.
Market forces clearly aren't dictating the number of medallions, it's political. Given that fares are still regulated, there's no benefit to creating a shortage of taxis other than inflating the price of medallions. Who benefits from the inflated cost of medallions and who rents them out to taxi drivers?
Like I said, Medallions are there to control supply to ensure profitability of taxi drivers. Sounds like bribery? Well not if the government is dictating your price and business model.
The government says "you can't charge 10 bucks a mile when it is raining during rush hour." And note, that is exactly what Uber does when it is raining.
Limiting competition is the compromise for limiting their profitability. The government is ensuring they'll profit, but not too much. It was a common method of regulation in the past.
The problem you're ignoring is that demand vastly outpaces supply which is why the cost of medallions is so inflated. Additional medallions could be sold by the city to increase supply without affecting existing cab utilization or profits but that doesn't happen. Why? Well because the medallion owners rent their medallions out and if the supply of medallions increases then the demand and thus rent paid for medallions go down.
> In New York the medallion system was introduced when the supply of taxis exceeded demand. Medallions were a way to control supply ...
Regulating supply is about more than fares. Traffic is an externality for the taxi/rideshare company, a 'tragedy of the commons'. I've been in cities where traffic has become much worse due to the large, unregulated influx of rideshare drivers; the cities should auction off slots - which is what medallions are (AFAIK).
Medallions can be used in a number of ways. My comment was pointing out that why they were introduced initially was not to create a commodities market.
Market forces clearly aren't dictating the number of medallions, it's political. Given that fares are still regulated, there's no benefit to creating a shortage of taxis other than inflating the price of medallions. Who benefits from the inflated cost of medallions and who rents them out to taxi drivers?
Don't tell me it isn't lobbying or bribery.