Re:Taxi Medallion Prices Are Plummeting, Endangering Loans
by xapata on Tuesday January 31, 2017 @07:09PM
(#13536793)
The market price of a ride is based on the supply and demand of a ride. Not being able to sell a medallion will reduce supply. Holding demand constant, price will increase as supply decreases.
If a medallion owner is happy driving 10 hours a day, but a potential owner would be happy driving 12 hours a day, the current owner should sell to the more eager driver and supply of rides will increase. If the owner cannot sell, then supply of rides is stuck at a lower level.
If the number of medallions in circulation is constant, the market price of a medallion is not a causal factor in the cost of a ride. The causality goes the other way around.
If a medallion owner is happy driving 10 hours a day, but a potential owner would be happy driving 12 hours a day, the current owner should sell to the more eager driver and supply of rides will increase. If the owner cannot sell, then supply of rides is stuck at a lower level.
If the number of medallions in circulation is constant, the market price of a medallion is not a causal factor in the cost of a ride. The causality goes the other way around.