Out of Control Policy Blog

Taxi Deregulation in Minneapolis Upheld

In 2007, Minneapolis passed legislation eliminating its cap on taxicabs. As a result, the number of cabs licensed to operate in the city will increase by 180 in the coming years. The cap will be completely lifted by 2011.

The existing cab companies, however, sued the city, arguing that the higher than market revenues they received under the regulated system would fall, and they deserved compensation. In essence, they believed they believed they were entitlted to the benefits of keeping competition out.

Fortunately, the Minnesota courts ruled against the taxicab companies.

"In response to the free-market and consumer-friendly reforms, the established taxicab cartel sued the city, demanding the reversal of reforms and proclaiming its owners should be able to keep the spoils of the old law that excluded new competitors from the taxi market in Minneapolis for more than 10 years. 

"But the U.S. Court of Appeals for Eighth Circuit ruled that taxi licenses do not “provide an unalterable monopoly over the Minneapolis taxi market.”  In rejecting the cartel’s “takings” argument, the Court further held that the “property interest that the taxicab-license holders’ may possess does not extend to the market value of the taxicab licenses derived through the closed nature of the City’s taxicab market.” 

"Throughout this case, the Institute represented taxi entrepreneur Luis Paucar, who had tried for nearly four years to provide service in Minneapolis.  He has received 22 licenses under the new law. “All I ever wanted to do was to enter the market and compete,” said Paucar.  “Today’s ruling protects my right to do so.” 

Fortunately, the Institute for Justice's Minnesota chapter was there to not only push for deregulating the market but assist the city in fighting the taxicompanies. Another victory for IJ!

Samuel Staley is Research Fellow


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