The Sinking Ship of the Medallion-Based Taxi Economy

by Reihan Salam

Rohin Dhar of Priceonomics argues that the artificial scarcity of taxis created by tight constraints on the supply of taxi medallions has been doomed by the rise of ride-sharing services. Yet he also argues that professional drivers, who have the knowledge and intuition to be in the right place at the right time and to read customers, will flourish in this emerging post-medallion system, earning substantially more than amateur drivers who choose to pick up a few shifts to supplement their income. Dhar ends his post by arguing that rather than entrenching the medallion system, local governments should work to protect the interests of drivers by preventing ride-sharing apps from requiring platform lock-in, i.e.:

Right now drivers can only work for one ride-sharing app. The company you drive for is responsible for 100% of your earnings – a level of control that could be abused. If regulators want to help consumers and drivers, they should mandate that a driver cannot be locked into one ride-sharing platform. A driver should be able to freely get a pickup call from Sidecar, Lyft or whomever. More competition between the ridesharing apps is good for drivers and good for consumers.

Dhar acknowledges that local governments might go in a very different direction and ban ride-sharing apps. It will be interesting to see which cities go in which direction, and how variation in medallion systems will correspond to variation in quality of life, cost of living, and accessibility.

The Agenda

NRO’s domestic-policy blog, by Reihan Salam.