Case study 4: new york cabbies


The purpose of this assignment is to help you practice skills that are essential to success in this course and your professional life after graduation. You will demonstrate how to use the information you have learned in this course to make a business decision.

A manager needs to accurately assess the market structure they operate to determine how to operate efficiently. Many times the market can change in an instant.

You will build skills in seeking out relevant choices given the information then formulate a coherent analysis based on researched evidence. This assignment also requires you to clearly communicate in a written format (general education skills: critical thinking, communication, and information literacy).


New York Cabbie

Many people who have visited New York have a New York Cabbie story. In discussion with Dr. Kelly George, she can recall the time when her three children, very young at the time, realized they could raise their arm and get a car on demand! They walked all over New York, trailing behind hailing cabs right and left. In the childrens’ minds, cabs were a transportation means to get them around the city. They had no idea of the economics behind it all.

New York taxis are highly regulated, much like any other large city. Standards of care, fare, and jurisdictions are set by a licensing authority. The licensing authority also sets the number of ‘medallions’ available that each yellow cab must carry in order to operate. The number of medallions have been constant at 11,787 from 1937 to 1996. The number remained constant until 1996 when the city sold 133 more (Gelder, 1996). Token increase in medallions have been authorized and now stand at 13,587 (New York City Taxi and Limousine Commission, 2016).

The commission is caught up in a crossfire. Consumer advocates argue about standards of service and fares. There are substitute products available. Should additional medallions be authorized and sold to potential cabbies? Would this be good for the industry or not? Is the regulatory burden too little or too much? What type of market structure does this industry operate in? Are there still barriers to entry in this market? Should the government alter their regulations of the industry?


Gelder, L. V. (1996). Medallion limits stem from the 30’s

New York City Taxi and Limousine Commission. (2016). 2016 TLC factbook

Topic/Question – Conduct an economic analysis and determine what is the optimal industry position from the point of view of a consumer, a producer, and the government. Use real data where possible to advocate your position. Also, use academic sources as part of your literature source. Current APA format. 

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