[patio11]

Medallions are a conspiracy against the public, especially the poor and minorities, who both are disproportionately refused cab service and prevented from lawfully pursuing a value-creating occupation in their communities which requires only modest capital and no special training.

See also hairdressing regulations and a host of others.

I could be persuaded there exists an optimum amount of regulation for compensated car rides north of that for uncompensated car rides, but medallions have to go. With market values in the six figures though, good luck: holders have solid incentives for corruption like their lives depend on it, but the average citizen just gets minority overcharged, and the worst affected do not vote or matter in most political calculuses.

[tptacek]

Disagree. The policies behind medallions may be stupid and unfair, but their existence provides a mechanism of accountability (you can lose them, and they're hellaciously expensive) that doesn't exist with iPhone dispatch.

It doesn't surprise you that cab drivers in Chicago basically never drive you to random destinations, or change fares midway through the ride? The goodness of cab driver hearts isn't what's preventing it.

[patio11]

I do more of my traveling from airport to suburbs than inside the city, so I get to use a car service. It is pretty simple: I call American Taxi (by way of Bangalore), they send me an Eastern European immigrant with a car, and he whisks me home for the published flat fee.

Their incentive to not screw me is that they value my continued custom (and chargebacks are a beast). His incentive to not screw me is that he values his cell phone continuing to buzz with new fares. They transparently operate in a low-trust environment: there are cards in the back of the back of the car for who to call for a refund in event of a dispute.

Putting this on an iPhone makes it geekier, but does not appear to change the threat model. No medallion, and pretty close to a technolibertarian paradise. I feel the need to illegalize something to wipe that smug look off their faces. :)

Sadly, they are legally prohibited from offering exactly the same service if both endpoints are within Chicago proper.

[nvrnude]

Putting it on iphone allows UberCab to collect a profile for all drivers and customers and make that profile value (ratings) publicly available for future riders and clients. Transparency is good but recorded transparency made publicaly available for future decisions becomes powerful.

[tptacek]

This drastically idealizes UberCab profiles. That's easy to do now when UberCab is largely an abstraction, and the sole provider. It gets a lot shadier when UberCab is one of 10 companies doing this, when the market segments along lots of other attributes (high-end and low-end providers &c), and when it starts to become worth it to game profiles.

[ajju]

When you say "by way of Bangalore", do they have their call center in Bangalore? /just curious how many taxi dispatch services do this.

[abalashov]

Yes.

[tptacek]

Putting it on the iPhone scales the process up. Some things work fine at Patrick McKenzie scales, but not so fine at 40 fares per day per cab. There is immense competition for airport fares (it's one of the big problems with cab service in SF) and more incentive not to play games. The same can't be said of random fares on city streets.

The only time I've ever been screwed with by a cab driver was with an unlicensed car service.

[patio11]

American Taxi dispatches forty thousand fares a week. They're a wee bit bigger than me.

[tptacek]

Come on, Patrick. American Taxi is pretty much the cab company for all of the Chicago suburbs. You think they do 40k fares to/from ORD? That's 500 fares an hour.

There's a difference between airport taxi service by chauffeur-licensed drivers dispatched by a branded cab company (with something to lose if drivers misbehave) and "I signed up with 1 of 5 different companies that dispatch cabs with iPhones".

I don't have prove that the Chicago medallion system is sensible; I'm only objecting to the notion that there is no valid concern behind them other than for-profit restraint of trade. There are absolutely valid concerns behind medallions. Go to an NYC airport or outside Penn Station and find an unlicensed cab; take 10 drives, and tell me how many of them try to screw you over. Do the same thing with medallion drivers; none of them will.

[three14]

In NYC, my experience with unlicensed cabs at airports is limited, but every time they did try to take advantage.

However, I had much more experience with unlicensed cabs in Washington Heights (north end of Manhattan, where licensed cabs refuse to cruise around to get business) and I never remember anyone trying to rip me off. Much of the time this wasn't with calling any specific company, just flagging down (illegally) whichever car was passing.

I think there's just too much money to be made from unsuspecting tourists at NYC airports.

[CWuestefeld]

Medallions serve to limit who is allowed to provide the service. There is no need for this limitation in order to ensure honest service.

For example, cabs could earn (and risk losing) a "Good Cabdriving Seal". There's no need for the quantity of such seals to be artificially limited: they could be unlimited, but only awarded to those that prove worthy.

And while we're at it, the agency doing the certification need not be a government agency at all. Why not Good Housekeeping, or Underwriters Laboratories, or Better Business Bureau?

[rsingel]

Actually, airport fares aren't that great and they are getting worse for drivers (fee changes and cops on 101). But for the drivers who don't want to work much it's fun to hang out there. The problem with cabs in SF isn't SFO, it's simply there aren't enough cabs on Thursday to Saturday nights.

[tptacek]

Last time I had this discussion with a cab driver in SF, he explained that there's some issue with the way cabs are dispatched in SF that pulls drivers to SFO, and that SFO is overserved at the expense of the city. I wish I could remember the details.

It wasn't "cabs are lazy".

[muhfuhkuh]

Ugh, don't get me started on SF cabbies. They are not only licensed but regulated by price. They also pretend to not know where anything is and will drive around to find your destination, hiking cab fares up accordingly. And, because you may not know the lay of the land (and can't understand their likely intentionally-thick foreign accents), you can't exactly tell them where to go. I had one that claimed to not know the best way to Coit Tower from the Ferry Building, so _he asked me_. Seriously.

It's a big rip-off and I am thankful whenever I visit SF to have a zipcard. Now I only pay BART to get me from SFO to (near) our vacation rental. If ubercab can provide fares without that runaround, I'm all for it.

[cabalamat]

> It doesn't surprise you that cab drivers in Chicago basically never drive you to random destinations, or change fares midway through the ride? The goodness of cab driver hearts isn't what's preventing it.

A voluntary medallion scheme would prevent that; the city government could issue medallions to those who fitted whatever standards it chose to lay down.

And customers would be free to choose to use a medallioned or unmedallioned service.

[tptacek]

Don't get me wrong; the city medallion systems are evil. I'm just saying they're a necessary evil. If we could replace them with something sane, I'm onboard!

[gojomo]

You're quick to dismiss all prospects for a mobile-device-assisted reputation system based on v1; assume instead that it iterates a number of times and eventually chiefly helps the dispatchers identify bad actors, rather than customers.

With digital cameras and other low-cost person and location tracking technologies, it's not easy for drivers to take riders on any ride other than that which was contracted, nor for providers with bad reputations to borrow the identities of others. Branded quoted dispatching has returns to scale -- perhaps it's even a natural monopoly -- and incentives for self-policing. So bad actors can't just hop to another of multiple dispatchers and get the same amount of business.

Floating rates and open entry can restore service to areas that regulated rates sometimes cause to be unserved -- because they're comparatively hard to get to or dangerous, and there's plenty of business elsewhere.

And finally, for all the supposed protections provided by regulation, a city with strict regulations will also have a bunch of gypsy and counterfeit cabs -- and in SF, if local media reports here are to be believed, many of these are indistinguishable from the 'real' thing, even by most police/enforcers. You get in one -- and you get indistinguishable service as from other cabs, because the operators want to be cabbies, not robbers. And yet -- iPhone dispatching could give out a 1-time single-word-password more secure than any cab 'dress'. So if this were really something to be scared of, a branded iPhone dispatcher can provide more assuarance than the city medallion authority.

There is a valid concern at the heart of taxi licensing -- but it long ago grew into primarily a cartel, using that original justification to enrich incumbents, doing more damage than benefit. And, the restricted medaliion program is a solution from another era; let us try to get the same benefits with new tools, and see how it works.

[tptacek]

Try it out in San Francisco. San Francisco cabs are horribly broken.

Unfortunately for your argument, while the medallion system does unjustly restrict competition for cab driving jobs in Chicago and NYC, it does not in fact appear to harm consumers. Cabs work in Chicago and NYC. The potential harm of deregulating and devolving controls to unproven technology far outweighs the benefit.

[gojomo]

Totally agree SF is where this should be tried first -- it's the US city where cabs are both needed and broken, and smartphone adoption is very high. And the great thing is: that's where UberCab is in fact starting.

However, I expect that if the service becomes popular, both the cab and MUNI lobbies will attempt legislative sabotage, and the SF supervisors are so enamored of paternalistic reasoning it's a real threat to the business.

[yummyfajitas]

A very simple replacement system: unlimited medallions will be issued. The cost of a medallion is the cost of policing 1 driver (e.g., 1 random inspection per month, background check, car safety, etc) + 15% profit for the city. Prices will be set at market rates, but must be fully disclosed to passengers before the ride.

[tptacek]

How is it a win for consumers to let taxi fare rates float? Taxis are very cheap (many reasonable drives inside the Chicago Loop are within 100% of what it would cost to take the CTA). Floating rates would almost certainly rise.

If a regulatory change harms consumers, what's the point of deregulating?

San Francisco might benefit from deregulation, because there are political problems and structural breakages in their system. But the Chicago and NYC cab systems work pretty well right now as far as I can tell.

Incidentally, while I agree that medallion caps are anticompetitive and an artifact of old price-fixing schemes, they have a beneficial effect of making it expensive to operate a licensed cab, which creates incentives for cab operators to avoid some negative externalities of their business (like running people down, or operating blatantly unsafe vehicles, etc).

[yummyfajitas]

Allowing fares to float while maintaining the current artificially restricted supply will cause prices to rise. Allowing increased competition will almost certainly lower costs.

Taxi revenues are currently $91k/year in NYC. Breakdown: $18k medallion, $50k labor, the rest is maintenance/insurance. If labor costs were reduced to $35k/year due to competition (taxi driving isn't exactly high skill labor) and medallion costs were cut in half, that's a 25% reduction in taxi cost.

http://www.nyc.gov/html/tlc/downloads/pdf/presentation.pdf

I think my proposed $9k/year would be sufficient to pay for taxi inspections to get rid of blatantly unsafe vehicles. As for running people down, current incentives not to do that seem sufficient. It's no more a problem to be run down by a taxi than by a Dominos driver, who has the same incentives as a taxi driver. In fact, Michael Q. Lateforwork has even less incentive than any taxi driver to not run people down - he won't lose his job for doing so.

[Eliezer]

You missed the part where the taxi gets rated. Problem solved.

[jfager]

You missed the part where the cabbie gets together with his friends to pad his stats and/or only screws 1 in 10 fares, and the part where people aren't going to perceive the same social incentive to review a cab as, say, a trendy restaurant.

[tptacek]

People will absolutely provide negative reviews when they get screwed by a cab; they'll be sputtering and looking for anything they can do to equalize the situation.

But that doesn't matter, because this is the eBay problem; a reputation adequate to do business in the system is too cheap to establish from scratch to make losing one a major deterrent.

[jfager]

I didn't say people wouldn't leave reviews, I said they wouldn't have the same social incentive to do so as with other things that get reviewed. Other incentives (revenge) of course still exist, but the result is probably a heavy bias towards negative reviews, which can still make the system pretty unusable.

And this isn't necessarily the eBay problem, if you have to provide a driver's license or some other set of credentials to set up a driver account, and you can't just switch your handle in the system. The post was kind of light on those details.

[tptacek]

Nope:

(a) There will be more than one of these dispatching services, so you'll just hop.

(b) There's an inherent TOCTTOU problem, since they're only checking licenses when you sign up, not every time you pick up a fare. You'll just "rent" someone else's license; there are presumably tens of thousands of people who don't care what their cab dispatch reputation is.

[maukdaddy]

I don't think the average, I'm from east bumfuck, tourist will provide a negative review after being screwed by the cab. They aren't going to know! Yet they are precisely the ones protected most by the [broken] medallion system.

[ced]

What prevents you from walking away without paying? (that's a genuine question, not a flippant remark)

[Estragon]

Nothing. I did it once, in a particularly abusive situation in Boston.

[tptacek]

I'm guessing you're male, young, a US resident, and not physically disabled. Tweak any of those variables, conduct 10 trials with an otherwise randomized population, and see how the results compare to your experience.

[tptacek]

Physical intimidation.

[steveklabnik]

Wouldn't the fact that you're charged through Ubercab prevent a lot of this kind of thing?

[sprout]

http://xkcd.com/325/

Alt text mainly.

[jfager]

I don't know about other places, but here in NYC, in the poorer neighborhoods in Brooklyn at least, there's a thriving system of taxi alternatives. You'll frequently see cars or vans packed full of people getting rides for a buck or two, and the cops don't seem to pay much attention to it.

In Manhattan or other parts of the city, I don't see how this kind of thing could compete with the yellow cabs or the car services. People have the money to pay the higher prices, and there are enough horror stories (true or not) floating around that very few would see it as worth the risk.

[yummyfajitas]

Jersey City has jitney buses which are an excellent means of public transit. They compete with public buses, providing more frequent (but less predictable) service at lower prices.

[snorkel]

The limited supply of taxi medallions is a good thing otherwise city streets would be clogged with taxis even more so than now.