Big Yellow Cartel


Montreal mulls a sensible shift in its taxi regulations:

Compete? In an open marketplace? You talkin' to me?

Montreal's cab drivers are grumbling that Bixis and the 747 airport bus are taking away business, but a policy paper published…by the Montreal Economic Institute suggests deregulating the taxi industry would help the market adjust to changing supply and demand for cab rides.

"Consumers on this side are actually big losers," said Vincent Geloso, a master's student at the London School of Economics, who co-wrote the paper with Germain Belzile, a researcher at the MEI.

There currently aren't enough taxis in the city to meet the demand, he said, so people are waiting longer for cabs these days.

"It's also harmful for new entrants into the market because of the limited supply of permits. To just begin to work as a cab driver, you have to pay close to $200,000," he said.

The provincial transport commission limits the number of taxi permits available in Quebec. There are currently 4,442 permits in use in Montreal. They are resold by existing owners, although they actually have no real value. The high price tag for a permit reflects the value would-be cab drivers are willing to pay to get into the market.

By removing the restriction on the number of taxis operating, drivers could get into—and out of—the market more easily, the policy paper says.

You can read the paper itself here. While its basic arguments aren't new, I was happy to learn from it that several American cities have liberalized their taxi rules, as have the authorities in Ireland, Sweden, and New Zealand.

Gratuitous video bonus: