Same old news for Ottawa’s taxi market

The Ottawa Sun‘s Susan Sherring notes that a new proposal regarding Ottawa’s taxi system has appeared at City Hall. If adopted, every time a taxi plate was sold, the new owner would have to provide an accessible cab. The proposal is hung up, as Councillor Mark Taylor, who chairs the city’s community and protective services committee, wants it to be given more study.

Annoyed by the typical (and typically annoying) political hang ups, Ms. Sherring is a big fan of the new proposal, arguing that it is a good fit with the evolving demographics of the city. I am less inclined to believe this is such a happy development.

To begin, Ms. Sherring presents no evidence of a demonstrated need severe enough to so limit the transfers of plates. She quotes the head of Coventry Connections (one of Ottawa’s cab companies) who explains that the service level for customers who require the accessible taxis is the same as the service level for those who do not. I can understand the argument that such a level of service is insufficient, but the proposed motion does not adequately address that issue.

The true issue is that Ottawa still has an archaic taxi system that limits the total number of cabs on the road. If service levels for patrons requiring accessible cabs is too low, it is because the service level of Ottawa taxis is too low, and the only real way to address that is to open up the Ottawa market and allow more cabs. More cabs will mean higher service levels; there can be no doubt about this.

As it stands, this new proposal might increase the service levels of accessible cabs by putting more of them on the road, but it might also have the effect of lowering the overall number of cabs. And since accessible cabs can serve any rider, we might not see the increased level of service for customers requiring accessible cabs.

This new policy, if adopted, would result in yet another barrier to entry in the cab market. It would reduce the number of potential new plate owners as they would have new added costs in order to use a plate. Though this would create a greater overall cost for the buyer, it would actually push down the price for each plate – less demand and lower return on investment (resulting from higher input costs) equals a lower price. And a lower price means less incentive for an existing plate owner to sell. As you can see, the city is potentially just distorting the market to an even greater degree than they already are.

The level of absurdity is matched only by the level of the insult to the citizens of Ottawa. These taxi plates, which are worth thousands of dollars on the grey market, are just permissions granted by Ottawa’s government, on behalf of the citizens. People are using this regulatory system as an investment vehicle. When a plate is sold, government favour is sold. Generally, we think selling government favours is wrong. It’s standard operating procedure in Ottawa’s taxi industry*.

Maybe council is playing the long game here. Maybe this new proposal will help to expose the problems of this troubled industry (though anyone paying close enough attention, as city councilors should, would already see them).

Maybe, but I doubt it. The likelier result is that plate ownership will become even more concentrated in the hands of a few cab companies. It’s a virtual oligopoly out there anyway, with very few private cabbies on the road. Corporations are going to have far greater means to put accessible vehicles on the road, so the plates are going to be more valuable to them. The taxi lobby, already a disproportionately powerful interest group in Ottawa, will become more emboldened, and their privileged status will become even more entrenched.

It is nice to see council considering a proposal against the expressed wishes of the taxi industry, but this isn’t the right move for Ottawa’s taxi market. We need to free our taxis, not add another layer of regulation.

*And no blame should placed on the cabbies and cab companies for this. They’re just responding to incentives, and many of them would have paid thousands of dollars for the plate initially, so recouping that cost isn’t some grievous moral transgression.

Advertisements

2 thoughts on “Same old news for Ottawa’s taxi market

  1. Pingback: Same old news for Ottawa’s taxi market | Jonathan McLeod

  2. Pingback: The Tyranny of Taxis | Steps from the Canal

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s