I took a taxi today from National Airport to Northwest Washington, D.C. The District has replaced the zone system that prevailed for decades with conventional taxi meters. Fares are about $1.50 per mile, compared to $2.00 per mile in New York City and $2.80 in Boston.
My driver owned his taxi, a brand-new Toyota Prius. There are few government-imposed limits on entry into the taxi market in D.C. A driver takes a class, passes a test, pays a few hundred dollars per year, and welcomes his customers. Taxis are plentiful and the prices are pretty low, which is no doubt appreciated by the politicians and their staff members who use them.
In New York City, by contrast, the artificial scarcity of medallions generated by the government has driven up the price to $766,000 (source). Taxis can be tough to find, especially outside of Manhattan, and the customer needs to pay enough to provide the owner with a return on a $766,001 investment (a lot of New York cabs seem to be worth about $1 for the vehicle, so add that to the cost of the right to work (the medallion)). The drivers see very little of this money, as competition keeps their wages minimal (more).
The situation is similar in Boston, with medallion prices a significant fraction of a million dollars.
Students of politics might not be surprised that in a city where many taxi customers are politically powerful, things are set up so that taxi rates and availability are as favorable as possible for the consumer.
Also, the NY system has brought into existence a large (huge?) number of black market “car service” operators — completely unregulated I am sure and certainly less expensive than the licensed yellow cabs.
The conclusion drawn here is poorly worded – it should be “in a city where many taxi customers are politically powerful, things are set up so that taxi rates and availability are as favorable as possible for the POLITICALLY POWERFUL.” As someone who lived for nearly 20 years in the DC area, I remember the old “zone system” – it was by far the worst system I’ve ever seen for the average person (especially tourists.) The zone map was drawn to make it cheap to get between Capitol Hill and lobbyist offices on K-Street; those with local knowledge could direct the cabs street by street to ensure that a zone boundary wasn’t crossed unnecessarily, minimizing their fares. If a cabbie thought you were a tourist, they would take relatively fast routes that crossed a lot of boundaries, or try to claim that you went through more zones than you really did to charge you more. Even if you went to the cops, unless you could name every street the cab used, you would be stuck with the fare.
Here’s a link to the old zone map, and you can see what I’m talking about (1.3MB PDF):
http://dctaxi.dc.gov/dctaxi/lib/dctaxi/Taxicab_Zone_Map2.pdf
Remember: politically powerful people will only lower costs for those who use the same services in the same way the powerful do.
I agree (as a New Yorker for much of my life) that their medallion system, and the whole way taxi service is regulated in general, is very poorly thought out.
Although, in spite of this, it is surprising to see in the following link that NY’s cab fares are about average for a major US city … they are higher in places like LA, SF, Miami, Orlando, even Minneapolis.
Cities with low rates like DC include Dallas, Phoenix, Chicago, and St. Louis.
http://www.taxifarefinder.com/rates.php