No To Taxi Medallions

(cc photo by rjs1322)

Dave Alpert reports:

Another bill that’s likely to generate more serious debate is a measure from Thomas, Michael Brown (at-large) and Marion Barry (ward 8) to establish a system of taxicab medallions, with separate categories for DC resident drivers and non-resident drivers, as well as special categories for taxis operating in underserved areas and low-emission (hybrid) taxis. This topic is worth its own, separate post.

I think it’s important not to overcomplicate this issue. Adopting a taxi medallion system would be a bad idea. Right now, the supply of taxis is driven by market forces. The fares are regulated at such and such a level, and the city supports approximately as many cabs as it’s profitable to operate at that level. If we use medallions to restrict the supply of cabs to below the market level, cabs will become scarcer. In particular, they’ll become scarcer in more peripheral parts of the city. When DC has all the cabs the market can bear, that means lots of cabs in core areas and some cabs in other areas outside the saturated core. If you restrict the supply of cabs, the core won’t saturate and drivers won’t want to go anywhere else. You can try to make this up by creating an ad hoc special category of medallions “for taxis operating in underserved areas” but there’s no reason to think a central planner is going to get this done better than the market.

You need to ask yourself, what problem is this supposed to solve? The problem it’s supposed to solve is that incumbent cab drivers would like to limit competition and make more money. That’s understandable. I’d like to see a medallion system for new bloggers implemented for the same reason. But it’s still a terrible idea. Mayor Vince Gray owes the taxi driver lobby a lot for their support during his election campaign, but that only underscores the fact that this is a straight-up giveaway with no real policy rationale.