The United States taxicabs operate under a well constructed and developed framework. Most cities in the country adhere to a licensing system which limits the number of taxicabs permitted to operate within the confines of the city. These permits are often referred to as medallions or CPNC (“Certificate of Public Necessity and Convenience”). (Calver, 308) Issues related market entry for taxi business is controlled by the taxi regulatory authorities based on city dependent predetermined guidelines. A key decision that such regulatory bodies are required to make relates to the number of taxi registrations allowed at a particular point of time. If too few taxicabs are allowed to operate, the ensuing shortage of service facilities may lead to long waits for cab service and at times may fail to access the service by any means. On the other hand, a saturate condition of the industry may induce service difficulties like old and madly maintained vehicles and high turnover of poorly paid and inadequately competent drivers.
In addition to the common people, social service organizations and various transit service providers are vulnerable to the undesirable influences as a result of oversupply or undersupply of cab service. Social service organizations that subsidize taxi charges for elderly and handicapped citizens may fail to provide adequate services to such clients, who often travel short distance and need aids and find it difficult to access taxi services. Transportation agencies cutback on costs by outsourcing some para-transit journeys to taxi associations may face difficulties on account of capacity shortages or below standard of condition of vehicles and under-par drivers.
A key aspect related to demand for taxi service is population count of the region. Bigger cities usually allow more taxi registrations. Regulatory bodies often evaluate the number of registrations as compared to the number of taxis in other similarly populated cities or areas. The drawback of such approaches is the missing standardization of taxicabs-population ratios. Various identically populated cities frequently allow different number of permit limits.
A range of processes are made use of across the U.S. cities to limit the number of registered taxi permits. The most elementary and subjective technique is to fix the maximum number of taxis that can be operated at that particular time. Another widespread method is to necessitate taxicab businesses to provide the “public convenience and necessity” (PCN) (Calver, 311) to prove the increase in demand. Often the PCN standard is linked with an intervallic review process to evaluate expansion opportunities based on demand growth. An associated technique is to fix a dynamic ratio taking into consideration the number of operative taxis and population levels, operation volumes or other issues. Whichever approach is adopted, taxicab regulatory bodies require an instrument to objectively evaluate the financial and operational feasibility to decide the apposite number of taxi registrations permitted in their region.
Works cited
Calver, Steven. “Planning transport for special events: a conceptual framework and future agenda for research.” International Journal of Tourism Research 9.5 (2007): 303-314.