The 13,605 taxi medallions in NYC are valued at about $13.5 billion. The 6,904 medallions in Chicago are worth $2.4 billion. To put it mildly, government regulation has created a lot of rents for those who own these medallions. From the Washington Post:
. . . Now, however, a market built on restricted supply is showing cracks with the arrival of start-ups that turn anyone with a car into a driver for hire. In Chicago, those cracks have triggered fears that medallion values are tottering. They have given rise to a high-stakes lawsuit, tentative new regulation and a glimpse of how this same clash between old power and new technology could play out in other cities.
Throw open the market — to amateurs, part-timers and the underemployed (and whatever they drive) — and medallions lose their exclusivity. Without which, they lose their value, too.
“As soon as you do away with limited access, over a period of years, the taxi industry will wither away and die,” says Michael Shakman, a Chicago attorney who is suing the city on behalf of investors and companies whose business would not exist without medallions. “You will be left with whatever the free market generates by way of transportation.”
That, Uber says, is precisely the point. The five-year-old San Francisco tech company — and the envy of Silicon Valley — has rapidly and strategically infiltrated taxi strongholds by enabling consumers to hail rides electronically from their smartphones.
Uber and companies like it argue that regulations intended for taxis don’t apply to a service no one could have envisioned when the laws were written. And consumers don’t seem to care what those laws say. They are piling in and leaving cities to chase after a fast-expanding business. . . .
