The economics of taxicabs

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Why does the total deregulation of taxicab services increase fares? This short note on taxi regulation in developing countries examines the economic theory of taxi markets and exactly how market failures should drive regulations.

According to the report Taxing Alternatives: Poverty Alleviation and the South African Taxi/Minibus Industry, violent turf battles in the South African taxi industry result from a weak institutional environment. To address violence and other problems, the government has proposed the South African Taxi Recapitalization Programme (TRP). Report author Karol Boudreaux criticizes the TRP, predicting it will increase fares, hurt small entrepreneurs, increase unemployment and make vehicles less safe.

Business Day has the latest on the South African taxi controversy. And I thought the debate over Washington DC’s zone system was lively.

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