Taxis, Supply Management and Speculation

In response to my recent post, Taxis and Picket Lines, commenter Peter notes:

The same thing can be said for any government quota system. Ottawa Taxis and Ontario milk come to mind. While not really defending the quota system, it does afford some reliability in supply. It also gives workers a chance to find jobs with some chance of a retirement plan at the end. There have been many suggestions about how to change the system, particularly in Ottawa, there is some jurisprudence in this regard dating back to the 1980s, I believe. I am not really offering much here. The taking away of long established government rights seems to be always met with arguments of financial hardship should those rights be revoked. Buying back the licenses or quota from every taxi driver or milk farmer maybe one way to do it but how much are we willing to pay as a city or province to do this.

Peter is correct that the taxi quota system is similar to other supply management programs, and he is correct that the intent of Ottawa’s taxi service is to provide some reliability in supply. The current system reliably limits the supply of taxis. Were it not for the plate system, we would see more cabs on the roads, and customers would have less difficulty hailing a cab. The plate system is a giant give-away to the entrenched interests of the taxi industry, and the extract rents from customers and new entrants to the market. It is a rather sick operation that a relative few people can hold the market hostage until their ransom is paid. Continue reading