[opendna]

Many cities regulate taxis as public utilities, in a similar fashion and logic to the regulation of telephone, power, water and public transit companies. We don't see much discussion of it anymore, but if you look to the early-20th century, you'll find many examples of granting monopoly licenses in exchange for universal service and non-discrimination.

To the extent that you think this is unconstitutional, unprecedented or inherently destructive, I encourage you to look at US economic history before 1970. AT&T's monopoly and rate regulation included transfer pricing which allowed them to subsidize rural services and connect the last mile to (almost) every home and business across North America. (Most of Europe accomplished the same with state-owned telephone companies.) The AT&T monopoly came with the mandate to provide services even where they were unprofitable (and sometimes for free), with the guarantee of profits elsewhere. That regime ultimately extended Bell Labs' $0 transistor licensing, which made the semiconductor industry possible. Similar requirements were made of power utilities, and that's also the logic behind taxi regulations.

Vancouver's taxi laws require at least 6-days/week service, for a minimum of 10hours/24hours. Taxis are (basically) required to accept all fares and serve all areas at all hours, without discrimination. In return for providing universal service (and to keep monitoring practical), the licensed providers were guaranteed a monopoly (and kept small in number). Of course, as soon as you grant a monopoly, you set the stage for price gouging, which is (as with AT&T) where the government-fixed rates come from.

In short: the prices aren't fixed arbitrarily, technocrats use them to advance designated public policy objectives.