An Ohio businessman’s challenge to artificial restrictions on the number of taxicab companies allowed to operate in the city is prompting lawmakers to recommend removing the cap.
Green Cab founder John Rinaldi sued the City of Bowling Green, arguing the city used caps on taxi permits to protect city-owned shuttle services from competition. City ordinances allow a total of 16 taxicab licenses to be issued to companies wishing to operate in the city. The Institute for Justice is representing Rinaldi in the suit.
The city’s municipal administrator and attorney recommend repealing the ordinance, as they were unable to determine why the cap had been enacted in the first place.
Protecting Government’s Interests
Institute for Justice attorney Meaghan Forbes says the Bowling Green Taxicab License Board, staffed by the city’s safety director and two appointees selected by the mayor, is using the ordinance to protect favored companies.
“The government can protect public safety, but that is not the case when it comes to these types of limits,” Forbes said. “It is unconstitutional for the government to use its power to protect itself or certain favored businesses from competition. It is not the government’s role to decide how many businesses a community needs. Green Cab’s story is a perfect example of why the government should not limit the number of businesses in a community.”
Trinity University associate professor of economics Sean Barrett says city governments should get out of the business of regulating taxicab companies. Barrett says deregulating the industry will discourage the practice of reselling taxicab permits and taxi medallions.
In 2002, Barrett studied the effects of taxicab regulation on Dublin, Ireland consumers and found customer service improved under deregulation, with wait times during high-demand periods declining significantly.
“Governments should not limit the number of taxicabs in any area,” Barrett said. “Permits should not have a market value. They will not have such value if the authorities do not restrict supply.”
Matt Hurley ([email protected]) writes from Cincinnati, Ohio.