Increasing value of taxi medallions

Today’s Tribune asserts that Chicago taxi medallions — a requirement if you want to operate a taxicab in the City– now cost $77,000 each (“Chicago hails two driven cabbies” Tribune, 2/8/07) . That’s up from “over $40,000” in 2004 (“City says cab agent misused $100,000, Tribune, 4/25/04) and $28,000 in 1991 (“Metro Briefings”, Sun-Times, 7/17/91),

Of course, fares were raised 11.7% in 2005 (“Cab riders turned off by rooftop ‘not for hire’ light: Survey finds most favor old off-on signal”, Sun-Times, 12/9/05; “Increased taxi fares quietly take effect,” Tribune, 5/12/05), 16% in 2000 (“FOR TAXI DRIVERS, FARE HIKE IS NOT WITHOUT A PRICE,”Tribune 12/1/00), about 15% in 1997 (“Taxi fares get a boost”, Sun-Times, 1/14/97), and about 9% in 1994 (“City Cab Fares Go Up Today, Sun-Times, 1/18/94).

Let’s do a little math here. Looks like since 1991, fares are up 48%, and the price of a medallion is up 175%. So medallion owners seem to be taking an increased share of revenue produced by the cabbies. For reference, the Bureau of Labor Statistics says consumer prices rose 48% between 1991 and 2006.

Meanwhile, in New York, medallions are going for over half a million dollars and there has been an effort to set up a working medallion exchange, where medallions can be traded on margin.

4 thoughts on “Increasing value of taxi medallions”

  1. wrong calculation. fare increase 48% and medallion price 175%. but what about increase of customers? population? or increase of cost of gasoline and car prices. you should start calculating from , how much driver makes and how much this medallion creates jobs, including owner(investor). thank you

  2. Good questions, Egor. I have no data on customers, and population is, well, more or less constant. Of course gas went up, as did car prices. Insurance, too, I bet. It seems that driver incomes remain low, certainly aren’t growing as fast as fares. Medallion prices are a kind of (capitalized) economic rent, created by the community and by the City government. To allow private individuals to collect this rent doesn’t benefit the passengers nor the (non-medallion-owning) drivers. If the rent were collected by the City, it would allow some reduction in other taxes with no increase in cab fares and no decrease in driver incomes. That assumes, of course, that we need to limit the number of cabs. btw, it seems that the city publishes no data about taxi revenues or expenses, but they do maintain a list of medallion owners . Most of course are corporations so we can’t easily see how concentrated the ownership may be.

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