Comments

Plus in Manhattan you get no heat or air conditioning - and no international business language of English ..... and last time there I had to provide cab driver directions to Yankee Stadium from Central Park west!

Posted by Sean at April 7, 2005 2:09 PM

Why do you take overpriced cabs from the airport to the downtown hotels? Take a shuttle! Prices range from FREE to CHEAP. Especially if you are going from some out-of-the-way airport like JFK into Manhattan. Shuttles give heat, AC, and you can always talk to the other passengers if the driver doesn't speak English. Plus, the really good ones know all the alternate routes to avoid the bad traffic at peak times.

Posted by Mike at April 7, 2005 3:24 PM

Efficiency. It's hard to fit 300+ people in a cab.

Posted by toddgsapp at April 7, 2005 3:38 PM

Even stranger when airfare from city a to city b is $800 and only $250 to city C but you take the same city a to b flight to get to city C.

Posted by Bob at April 7, 2005 4:26 PM

There is no mathematical relationship. Such a question reflects a cost-world point of view confusing value with cost or effort of providing the service. The same market forces that force the airlines to give you their seat for $200 force you to pay $100 for the convenience and privacy of the taxi seat.

Supply (abundant in the air, less so on the ground due to the aforementioned efficiencies of scale) and Demand.

Here's the real question regarding the demand side...How much is it worth to you to get from point A to point B 10 miles away in a strange city that your don't know (or maybe do know) so you don't have to walk it dragging or carrying 40 pounds of luggage?

Value is in the eye (or pocketbook) of the beholder (or buyer). It's what the market will bear.

Posted by frank patrick at April 7, 2005 4:29 PM

It is because of high barriers of entry to enter the taxi market.

The cab companies have a cartel and use the government to maintain it through medallions and licenses which cost thousands of dollars.

The taxi companies don't want new competition, so they help create obstacles.

In turn, this creates low supply, which does not meet demand...and thus results in high prices.
Simple. Government is the problem.

If everyone could start a cab company with just a driver's license...it would create more supply to meet demand and drive down prices.

Posted by Tyler Durdenx at April 7, 2005 6:21 PM

Sean,

I liked your comments best. My thought was not to wager a guess at the mathematical caluclation, but rather this. It sucks, doesn't it?

It's great when you're on the winning end of a supply and demand deal. Sucks on the other side though. :)

Posted by Tony May / Mayday Media at April 7, 2005 9:53 PM

you can rent a car for $50/day or less in any US city (NYC being the exception) and go anywhere after you checked in.

why would anyone take a cab anywhere (but NYC) unless they were clueless?

Posted by Tom R at April 7, 2005 11:06 PM

Economist Walter Williams makes some excellent points...he notes in his online article that, "In Las Vegas, John West applied for a license to operate his limousine. After having spent $15,000 and failing to prove that his business would "not unreasonably and adversely affect other carriers," his application was turned down. Nevada's established limousine operators get politicians to keep new entrants out so they can get away with charging higher prices."

Furthermore, Williams notes, "In New York, there's been a running battle between "dollar" commuter vans and the city's Taxi and Limousine Commission. Dollar vans emerged in 1980 during the city's transit strike. They operate along fixed routes providing badly needed services in Brooklyn and Queens. But they compete with the city's decrepit bus service. The riding public wants the vans but the Taxi Cab and Limousine Commission, acting on the behalf of New York's Transit Authority and transit workers union, wants them out of business."

The Williams article can be found here:
http://www.jewishworldreview.com/cols/williams090899.asp

Government is the problem.

Posted by Tyler Durdenx at April 8, 2005 1:43 AM

The same reason here in England it costs me as a male £5 to have a haircut and yet females happily will pay £50 or more.

By the way I happen to think women are scandalously 'ripped off' by hairdressers but nevertheless the market dictates - so be it with taxis I guess - if customers pay high costs - suppliers will charge high costs - it really is simple as that - you dont need a masters degreee in economics to work that one out.

Greetings from over the pond - final thought - if hairdressers charged 'per hair' of then of course mine would be even cheaper!!

Yours folickly challenged
Trevor

Posted by Trevor Gay at April 8, 2005 6:32 AM

Clever Trevor....I was just thinking the sam thing actually. The ladies do really get ripped off. However, do you think the male market will go in that direction? there's a lot of media noise about men starting to "care" more about their looks.(The Beckham effect?)....and brands like Gillette, King of Shaves, Nivea and Clinique, are all getting into the male beauty products game...

http://freddkambo.myblogsite.com/blog

Posted by fredd kambo at April 8, 2005 7:54 AM

Thanks Fred - yes I do think men are beginning to join the ranks of the great ripped off!!

My hair stlye has one of those wide partings so I guess I will not suffer too much but I worry for my two sons!!!

Seriously I think it is fabulous that men are beginninng to take their body more seriously.

My own philosophy is to enjoy a good diet and get excercise - my wonderful partner Annie and I joined our local gym in Janaury and we feel much better.

I would rather spend my money on getting fit than spending money trying to simply 'look good' while underneath the make up there is an unhealthy body!!!

Trevor

Posted by Trevor Gay at April 8, 2005 8:05 AM

We've just had a newspaper report in the UK about one flyer who found out that it cost more for the bottle of water they bought in-flight than it did for the cost of the flight without taxes. The bottle of water apparently cost the customer £4...

Cheers

Keith

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Posted by Keith Rickaby at April 8, 2005 8:31 AM

Sounds about right, Keith.

A friend of mine recently flew to Austria and it cost them less for a flight than it costs me for a standard return to London on the train (and I only live about 80 miles away!).

It's worth doing "door to door" sums too. Sometimes a flight may seem more expensive from a certain airport, but if you can go by train and avoid paying for airport parking, it may be cheaper overall.

Posted by Tim Almond at April 8, 2005 9:38 AM

Here's one difference this ex-cabbie can explain part of the effect with.

The cabbie is operating in a capitalist model, personally responsible for all her costs, while the airline is outside a capitalist model. Subsidized airports, organized fuel deliveries (sometimes subsidized or price-buffered), sometimes subsidized by government or forcibly subsidized by their own employees' pensions, sometimes granted tax easements or outright grants from localities seeking better service.

If there's a place in North America that subsidizes taxi drivers' wages, costs of operation, fuel or taxes, I don't know of it. But if anyone was willing to grant cab drivers the same kind of easements airlines get, they could be cheaper, too.

Posted by jeff angus at April 10, 2005 12:42 AM

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I don't think so, Jeff.

The cost elasticity of supply falls to nill when market entry is artifically supressed by this kind of so-called licensing.

Even if cabbie's were subsidized, there's no incentive for them to lower prices if there's no new competition in the market pressuring them to do so.

Posted by Jason Kerr at April 10, 2005 10:27 AM