Cab medallion owners sue NYC, blame Uber for ruining business

The value of NYC cab "medallions" has tanked, and drivers are fleeing.

Read the whole story

 

[noodz]

I live in Curitiba, Brazil. The municipality proper has a population of 1.8 millions, (3.4 millions if you include the metropolitan area). There are a total of 2250 "medallions" since 1975, and after much effort the municipality finally granted 750 new medallions last year, and is slowly issuing them starting this year. At best, this would mean one cab for every 600 people.

I won't complaint about the quality of the cabs,. They are so rare that they tend to be decent and well maintained vehicles, and their drivers tend to be polite. They are also prohibitevely expensive, and i will use them only as a last resort, especially if my destination is far.

Although Uber has arrived on some brazilian cities, there is still no sign of it coming to Curitiba. And yet the medallion owners are already lobbying to preemptively forbid anyone who does not have a medallion to transport passangers for a fee, basically denying Uber a chance to compete.

Uber might not be an example of ethics, but the market they are gaining is currently being squatted by people who are even worse.

I disagree that Uber is building itself a monopoly. If Uber does not maintain a minimum quality, it's very easy for the regular Uber user to just switch apps.

 

[noodz]

Just chiming in again, because i hear a lot about medallion owners needing to be compensated. New medallions issued last year in Curitiba, Brazil were issued based on merit (number of years the proposer has been actively working as a cab driver, with penalties for every traffic ticket). There were fees, of course, but they simply covered the cost of the certamen, they were pocket change compared to what it cost to acquire an already existing medallion in the parallel market.

I think a municipality must be either insane or extremely corrupt to issue new medallions in any other way. Brazil might be brimming with corruption, but even here they didn't had the chutzpah to do a regular first-price auction.

Thus, the only reason medallions are so expensive is because medallion owners created an artificial shortage and lobbied to keep the issuance of new medallions as low as possible. There is absolutely no compensation needed, because most medallion owners were classical rent seekers that are now crying because their money printing machine is broken.

Sure, there might be a few honest, hard working fellas who poured their life savings into acquiring a medallion and now realize the good they bought is worth nothing. But they are not entirely blameless for trying to get into a club that is a cancer to the economy.