The regulation of taxicabs in Toronto is analyzed as an example of the "producer protection hypothesis." The effect of entry regulations is to reduce the number of cabs and raise the the fare relative to an unregulated market. This transfers income from consumers to producers, plus imposing a deadweight loss on society. By 1987, regulation had resulted in a price about 25 percent higher than if market was unprotected. These potential rents are reflected in the value of a taxi license, about $95,000 in 1987. (Reprinted by permission of the publisher.)
Access from your library
This is a preview. Get the full text through your school or public library.