Commercial Taxi Market
General assessments on the commercial taxi market have become one of the most inquired topics recently and also today. Accordingly, like in many sectors, the government and firms restrict market entry. Through market entry restrictions, governments create artificial scarcity and start to increase prices for customers. These increasingly rising prices mean a transfer of wealth from customers to firms in the market. In such cases, through such a practice, the government provides certain rights, which could be easily used by everyone in the presence of competition in the market, to only a few privileged firms or individuals.
Taxi Plate Quota
In markets where entry and exit have started to be restricted recently, as a natural consequence of these situations, rent-seeking and activities to protect the obtained rents will gradually emerge. These activities, which lead to a decrease in welfare at the societal level, also constitute an obstacle to economic development. Accordingly, all entrepreneurs will try to benefit from these rent opportunities in the best possible ways. Instead of using all their resources to increase production or introduce innovations to the market, they will use them to influence bureaucrats and politicians. Competition among firms in these directions will start to cause their resources to be spent on these rent amounts.
In some cities, governments limit the number of plates in the market. At this point, entry into the taxi market is primarily restricted by the obligation to obtain a license available in each market and then by setting a limit on the number of these licenses. Today, in most cases, taxis cannot enter the market because they are forced to buy the plate from its existing owners in the market. The reason for this is that, as a result, the real owners of taxi plates demand high prices for the plates they hold. One of the most typical examples of the market where we will concretely see the entry barriers with such effects and consequences is the Istanbul commercial taxi market and the plate quota application applied to this market. Although artificial entry restrictions provide a transfer of wealth to taxi plate owners, it is possible to see that it leads to a loss of welfare for society.
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