Sunday, October 19, 2014

Introducing Free Market Economics Into Archaic Systems

In the article "The Tyranny of the Taxi Medallions" the author describes the archaic system of Taxi Medallions that was introduced in the 1930's. At the time of introduction the idea made sense, have the government require a certificate or medallion to legitimize the taxi business and provide a safe environment for people needing a fare.
As the years progressed this need for safety dissolved as medallions were stuck on a specific amount in the marketplace and the price for one exploded from a simple fee to sometimes over a half million dollars for a medallion. This situation negatively affected the consumers as well as the cabbies in multiple ways. While the demand for taxis increased as cities grew the limit on the marketplace made it so that there were never enough taxis to provide for the consumers demand. The negative affect on the cabbies was even worse. The system allowed the distribution companies to hold a lot of power over the cabbies with their monopoly on the medallions.

The burgeoning economy of apps designed to connect cabbies to the consumer directly are attacking the medallion problem head on. What negative affects could this potentially have on the consumer and cabbies alike? What other industries could this similair model be applied to?

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