Thursday, August 26, 2010

Taxi deregulation

My friend Vincent Geloso with Germain Belzile of the MEI, write about Taxi deregulation. Supply management should be eliminated in all sectors. I would love to get rid of the Weat marketing Board and the Milk Marketing board. Taxi deregalation would also be a good idea. Allow the market to work! read the paper at the MEI.

Taxi deregulation would be good for passengers and drivers

Restrictions on the number of cab licences result in higher fares and longer waits

By GERMAIN BELZILE and VINCENT GELOSO, Freelance August 25, 2010

For nearly 60 years, the number of taxis in Quebec has failed to keep pace with growth in population and income. In 1952, there were 4,978 taxis on the island of Montreal. Today, regulations limit the number to 4,445. Because of this scarcity, obtaining a taxi owner's permit in Montreal and Laval now costs more than $200,000.

Limits on the number of taxi permits were instituted during the Second World War. In 1973, the Quebec government took over management of the taxi industry from cities. At that time taxi drivers who had permits issued by municipal authorities received owner's permits at no charge. From 1985 to 1990, the Quebec Department of Transport instituted a plan to buy back 1,287 permits in Montreal, and remove them from circulation.

Today, getting a permit generally requires buying one from someone who decides to leave the industry. In 2009, there were a total of 8,254 taxis operating in Quebec. The very few new permits added since November 2000 (some 200 for the entire province) are valid for a maximum of five years and are non-transferable.

Supply management policies, aimed at limiting the production of goods or services so as to inflate their prices, are familiar in Canada, due in particular to the marketing board system in use for milk, chickens and eggs, mainly. It is less well known, however, that the taxi industry is regulated in the same way, with similar consequences for consumers. Restricting the number of taxi owner permits, as is currently done in Quebec, usually results in higher fares and longer waiting times for consumers.

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