Wednesday, May 9, 2012

Taxi Deregulation: Evidence From Minneapolis

Minneapolis lifted the limits on the number of taxis licenses in 2006 and the number of cabs has increased from 373 to 799. Many taxi drivers are upset according to the StarTribune:
Frustration spills from the front seats of Minneapolis taxis these days. With few fares in the back seats, some drivers have plenty of time to vent about an influx of cabs in the city.

Around the corner from the downtown Hilton Hotel one recent afternoon, a neat row of cabs waited hours for what could be a $5 fare. Said Ali Said was parked last in line, lamenting that his dispatcher hadn't radioed a call in two hours.

"I don't blame them," he said. "I blame the business. And I blame the city. Because they put too many cabs on the street."

The Minneapolis taxi industry has undergone a period of remarkable growth since the city lifted a longstanding cap on the number of licenses in 2006, with benefits for consumers and frustrations for drivers who now face unprecedented competition to make a buck. In the past five years, the number of licensed cabs in Minneapolis has more than doubled from 373 to 799.

"To the delight of the Convention Center and the government downtown, it's pretty easy to grab a taxi in Minneapolis," said Zack Williams, owner of Rainbow Taxi, one of the city's oldest companies. "But it's not so good for the guy trying to make a living behind the wheel."

Don't expect the city to jump in with a regulatory solution. Just like the number of restaurants, city business licensing manager Grant Wilson expects that the market will eventually determine how many cabs is appropriate -- the number has already fallen slightly from last year. If they don't make money, drivers will hang up the keys and do something else.
If you care about mobility, access and transit then the more cabs the merrier. This should be a great deal for the city that more cities should try.
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Unrelated, Grant Wilson has been on the job a long time. He was the guy I worked with on licensing my restaurant in the early 1990s. It's nice to see that he is still open to and encouraging of new ideas!  This is evidence of good governance.
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