Why Taxi Medallions Are Bad for Neighborhoods

We’ve commented extensively on taxi regulation in cities and states on this blog, and I take aim squarely and the destructive effects of taxi madallions on neighborhoods in an oped published in the Washington Post over the weekend. Taxi medallion systems explicitly limite competition, and when competition is limited, the neighborhoods suffer. I write, in part:

“There goes the neighborhood — literally — as taxi drivers inevitably would abandon low-margin trips in outer neighborhoods such as Anacostia to concentrate on the milk runs to the airport or serve higher-income customers along K Street and Capitol Hill.

“That conclusion may seem exaggerated, but other cities that have restricted taxicab availability have had that kind of result. It’s simple economics. Drivers focus on fares that generate the highest return, and their ability to do so will increase as competition becomes more limited.

“Medallions are metal plates issued to vehicles authorized to operate as taxis. Medallions have been around for decades in some cities and were widely adopted during the 1930s as an attempt to limit competition from new cab companies.

“The big winners in a medallion system are large existing companies. Once medallion systems are put in place and the supply is restricted, as the D.C. ordinance explicitly aims to do, the price of medallions goes through the roof. In New York, medallions sell for upward of $600,000. The going price in Boston is $400,000. Even in small taxi markets such as Columbus, Ohio and Minneapolis, taxi medallions and licenses have sold for more than $25,000.”

For more on taxis and regulation, see previous posts by me (and my colleague Harris Kenny) here, here, and here. For a review of where economists stand on taxi regulation, see the article (January 2006) in EconJournal Watch by Ted Balaker and Adrian Moore.

Samuel R. Staley, Ph.D. is a senior research fellow at Reason Foundation and managing director of the DeVoe L. Moore Center at Florida State University in Tallahassee where he teaches graduate and undergraduate courses in urban planning, regulation, and urban economics. Prior to joining Florida State, Staley was director of urban growth and land-use policy for Reason Foundation where he helped establish its urban policy program in 1997.

Staley is the author of several books, most recently co-authoring Mobility First: A New Vision for Transportation in a Globally Competitive 21st Century (Rowman & Littlefield, 2008). Texas Gov. Rick Perry aid Staley and Moore "get it right" and world bank urban planner Alain Bartaud called it "a must read for urban managers of large cities in the United States and around the world."

He is also co-author, with Ted Balaker, of The Road More Traveled: Why The Congestion Crisis Matters More Than You Think, and What We Can Do About It (Rowman and Littlefield, September, 2006). Author Joel Kotkin said, "The Road More Traveled should be required reading not only for planners and their students, but anyone who loves cities and wants them to thrive as real places, not merely as museums, in the 21st Century." Former U.S. Secretary of Transportation Mary Peters said, "Balaker and Staley clearly debunk the myth that there is nothing we can do about congestion."

Staley's previous book, Smarter Growth: Market-based Strategies for Land-use Planning in the 21st Century (Greenwood Press, 2001), was called the "most thorough challenge yet to regional land-use plans" by Planning magazine.

In addition to these books, he is the author of Drug Policy and the Decline of American Cities (Transaction Publishers, 1992) and Planning Rules and Urban Economic Performance: The Case of Hong Kong (Chinese University Press, 1994).

His more than 100 professional articles, studies, and reports have appeared in publications such as The Wall Street Journal, The New York Times, Washington Post, Los Angeles Times, Investor's Business Daily, Journal of the American Planning Association, Planning magazine, Reason magazine, National Review and many others.

Staley's approach to urban development, transportation and public policy blends more than 20 years of experience as an economic development consultant, academic researcher, urban policy analyst, and community leader.

Staley is a former chair for his local planning board in his hometown of Bellbrook, Ohio. He is also a former member of its Board of Zoning Appeals and Property Review Commission, vice chair of his local park district's open space master plan committee, and chair of its Charter Review Commission.

Staley received his B.A. in Economics and Public Policy from Colby College, M.S. in Social and Applied Economics from Wright State University, and Ph.D. in Public Administration, with concentrations in urban planning and public finance from Ohio State University.