Tuesday, March 12, 2002

Good Economics This article is so smart I thought I'd include it, even though it has nothing to do with computers. When I lived in New York, it impossible to catch a cab around midtown at 4pm. The city regulates taxis by limiting the number on the road and by setting what rates they can charge. As my "no taxi" problem illustrates, the city has too few cabs. Fools are suggesting that NYC increases the fares cabs can charge, but this will result in fewer cabs (they need to work less to get the same income) and more expensive cabs (price sensitive customers use subways and buses anyway) not more cabs, which is the problem. The effective thing to do would be to increase the number of cabs by issuing more licences, which currently auction for $200,000 a pop and would raise needed revenue for the city. But the fleet owners who monopolize this resource want to keep the quantity restricted, so will lobby against any increase. New Yorkers should expect a needless increase in fares along with an small license auction. They should not expect available cabs.


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