Re:End of the line for Uber?
by dredmorbius on Wednesday August 11, 2021 @11:51AM
(#28143572)
Part of the profit in taxis is through medallion appreciation and rentals.
Taxi medallions are required to operate in a city. The supply is artificially constrained, creating a taxi cartel. But medallions are rarely owned by the drivers themselves, rather they're owned by the taxi company or an investor, and leased back.
Limited supply + lease -> rents
Plus the medallions can serve as collateral (as with any asset), or be bought and sold. If one entity controls enough of them, they can then influence taxi availability (and hence prices) within a region.
This hits the bigtime only in a few major cities, but is probably enough of a factor in taxi finances to warrant a mention.
(I'm not nearly as knowledgable about this as it may seem. Mostly some discussions in econ courses at uni and the stray article since. Uber did crash medallion prices though.)
(Stock exchange seats are another somewhat similar asset, and also staple of econ course discussions.)
Taxi medallions are required to operate in a city. The supply is artificially constrained, creating a taxi cartel. But medallions are rarely owned by the drivers themselves, rather they're owned by the taxi company or an investor, and leased back.
Limited supply + lease -> rents
Plus the medallions can serve as collateral (as with any asset), or be bought and sold. If one entity controls enough of them, they can then influence taxi availability (and hence prices) within a region.
This hits the bigtime only in a few major cities, but is probably enough of a factor in taxi finances to warrant a mention.
(I'm not nearly as knowledgable about this as it may seem. Mostly some discussions in econ courses at uni and the stray article since. Uber did crash medallion prices though.)
(Stock exchange seats are another somewhat similar asset, and also staple of econ course discussions.)