Taxi Badge CostTaxibadge Costs
By 2013, a locket was up to $1.3 million in value, but competitors from ride-hauling applications like Uber and Lyft have lowered locket price to up to $160,000. In October last year, over passenger numbers exceeded those of yellows, with over 289,000 trips per diurnal on avarage, while yellows administered only 277,000.
In order to promote competition, the Taxi and Limousine Commission has taken steps to offer a piloting programme which would allow travellers to fix prices in advance by means of an application, while the yellows continue to suffer. Swiss Post was informed by auctions that at least 20 Medaillons would be on sale.
Taximedaillons cost million.
So what in the world is going on with the taxi medallion prices in New York? Of these, two just went for $1 million a share - a 42% rise since August, when the consensus was that $705,000 was a top ticket and that medals would soon lose value.
Behind the swelling of the locket, the tail wind is a limitation of the taxilicences. Although New York's economic development has grown rapidly over three centuries, the number of taxi signs has remained almost stable despite growing wages, populations and demand for inner-city transport. There is a difficulty with this view that if you look at the table of medal prizes, it does not have much to do with the power of the New York business community.
Most of the increase in prices has taken place in the last ten years, which have not been very large economically. Any taxi in New York City must have a locket. As New York has flourished in recent years, the prize for locket went through the ceiling.
Taxis could become a little more lively as the economy rebounds, but most of this additional revenue is taken home by chauffeurs and not by the holders of company medals. Company medaillons are those where the owner does not ride the vehicle; they are the ones pictured here. Entrepreneurial earnings are fairly constant and were presented in the commentaries to this paper:
A taxi rented to a driver can make a total of $82,524 over a year. Also, you omitted the cost of the automobile from your calculation. That is the actual cause why Medaillons are so expensive: good old-fashioned interest computations. Essentially, we are speaking here of a flow of around 75,000 dollars a year in actual terms.
However, the taximedaillon is not a taxed money, it is a taxed money. (Let's suppose, for the argument sakes, that the revenue from a taximedaillon increases at the same pace as inflation.) This is a 7.5% return on a $1 million dollar invested, which is not too bad at today' interest levels. Let us put it this way: How much would a loan cost that pays a $75,000 per year return in actual terms?
With a 1% return in reality, an annual revenue flow of $75,000 would cost you $7.5 million. Now, if you have a locket, you don't really get $75,000 a year. They have to cover the costs of servicing, insuring and employing employees; they also have to cover the costs of someone who manages their driver.
However, even if you lower your annual revenue to $50,000 a year, it is still a nice 5% return on your cash, and it is also a return that is much more like a true return than a face value return. There is also a policy risk: the major can produce new locket, so the value of the current locket is slightly lower (but not much lower as the medallion revenue is largely fixed).
This means that medal holders have a great deal of influence politically, and, historically, they have been good at ensuring that their incomes are maximised rather than suffered something that could diminish them. When Goldstein begins to dream of taxidegulation, he quickly steps into the cloudy country: Medaillons are a schoolbook example of what the economist calls rent-seeking behaviour:
When the number of cabs may rise (and when fare is unregulated), the number of cabs would rise and the fare for a taxi trip would decrease. If the number of cabs could go up, the number of cabs would go up. However, the cost of a taxi trip would not decrease because that is a legal act - the cost of a taxi fare is fixed at a pre-determined level and must in fact be fixed at a pre-determined level.
Deregulating cabin rates would create complete turmoil - New Yorkers would generally have to bargain for the cost of a ticket every taxi they board. However, I am worried that the way the tariffs are fixed is too much going to the medal holders. Reducing the tariffs would also reduce the amount that the medal holders could bill the riders, and the medal prizes would - at last - decrease.
How does NYC ever increase taxi rates when the revenue from these rates ends up going staggeringly to a fistful of millionaires? Those locket are licences to imprint cash right now.