Trading Medallion
The taxi industry is a classic example of “monopolistic competition”.?
To try and solve the problem of empty taxis, New York (like many big cities) regulates its taxi industry. The City Government issues a limited number of “medallions” of which you need one to operate a taxi. However, now they have the opposite problem: taxis are expensive and hard to find (especially when it rains). Furthermore, these medallions are traded for $US500K each [!], which makes it difficult to set up as a taxi operator.
But any proposal that the City should just issue more medallions to new taxi operators meets fierce political opposition from the holders of existing medallions. Why?
So someone wrote to the New Yorker magazine with the following suggestion: “Why not just give each medallion holder a 2nd, free medallion , to keep or sell as they wish? Then their investment would be safe and we could all get a cab at rush hour!’ Use a diagram to help explain the terrible fallacy in this proposal.
I said monopolistic, not monopolist
Ignore the first guy, he has no idea what he’s talking about.
This is, of course, monopolistic competition. Each firm (each driver) has some market power, but there are still a lot of different providers.
So, ok, here’s the scenario.
You give each cab driver an extra medallion. The first guy to get his in the mail goes “oh, wow, I could have a half million dollars if I just sold this thing, and I still have one to use for myself. The only thing this sale does to hurt me is to create one more competitor. But it’s not like it was a monopoly or even an oligopoly to start with, so I’m not losing that much on the margins.”
So he sells it, and so does everyone else who gets theirs, with the same thought in mind.
So all the sudden, there’s twice as many cab drivers out there. With all this competition, people have to cut their rates, and they lose some money there.
And, of course, the market price of the medallion has fallen, partly because the supply of them has doubled, and partly because fares have fallen, so there’s less demand for them, as well.
So unless you get yours before everyone else knows there’s gonna be a lot of them around, you’re gonna lose a lot of money on your investment.
Even if you hold on to your medallion, the over all trend will be to sell, so the rates are gonna fall no matter what. It’s in each individual cab driver’s interest to sell, even if it’s in their collective interest for the medallions not to circulate.
Alternative Currency Copper Bullion Medallion
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WHOLESALE LOT 6 24K GOLD PLATED WORLD TRADE CENTER MEDALLIONS (S644b) $49.95 |
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WHOLESALE LOT OF 7 SILVER PLATED WORLD TRADE CENTER MEDALLIONS (S644b) $54.95 |
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2011 Alaska Trade Unit 1oz. Silver Medallion Bullion $69.98 |
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Antique 1910 Advertising Trade Coin or Medallion “Casarets” $14.99 |
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AUSTRIA VIENNA 1884-AE MEDALLION by F.LEISEK-LOWER AUSTRIAN TRADE ASSOC. 61mm $140.72 |
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10 YEAR ANNIVERSARY~SEPTEMBER 11, 2001-2011~WORLD TRADE CENTER CHALL MEDALLION $3.99 |
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DISNEY TINKERBELL TRADING PIN LANYARD & MEDALLION 2003 $29.99 |
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PIECE OF THE WTC WORLD TRADE CENTER TWIN TOWERS MEDALLION WITH COA METAL $49.11 |
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2006 Ultra Gold Medallion Daunte Culpepper! TRADE CARD $1.49 |
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Vintage Lot of 34 TRADE GAMING TRANSIT TAX TOKENS Medallions $29.99 |
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100~1oz. TRADE DOLLAR/SEATED LIBERTY*2012*.999 Copper Bullion Rounds Medallions~ $131.59 |
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20~1oz. TRADE DOLLAR/SEATED LIBERTY*2012*.999 Copper Bullion Rounds Medallions~ $32.89 |
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WORLD TRADE CENTER COMMEMORATIVE MEDALLION $110.00 |
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VICTORIAN TRADE CARD St. Saint George Dragon Medallion VTC Advertising Premium $7.95 |
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NYC WORLD TRADE CENTER FALLEN HEROS NEVER FORGOTTEN 2001 MEDALLION COIN $15.00 |
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TRADE WINDS – LILY ASHBURY – MODA -#11454 16 – FLORAL MEDALLIONS, RED $4.88 |
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WDW Walt Disney World Pin Trading Lanyard & STITCH 2004 Medallion Metal New ’04 $14.00 |
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VINTAGE GOLF MEDALLION-BOSTON WOOL TRADE GOLF CLUB $48.00 |
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20-1oz. TRADE DOLLAR SEATED LIBERTY .999 Copper Bullion Rounds Coins Medallions $33.36 |
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Rare Antique Silver Enamel Jute Flax Workers Trade Union Fob Medallion 1931 $226.71 |
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WDW Lanyard Medallion Vintage Mickey Disney Pin Trading $9.99 |
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1961 Antique East German Leipziger Herbstmesse Trade Fair Medallion Style Pin $14.99 |
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SILVER TRADE UNIT SILVER ART ROUND MEDALLION LOT A5211 $69.89 |
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SILVER TRADE UNIT SILVER ART ROUND MEDALLION LOT A5212 $69.89 |
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FREEDOM TOWER NEW YORK WORLD TRADE CENTER TWIN TOWERS 9-11 $1 MEDALLION COOL $24.95 |
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Medallion Earrings – Teal – Fair Trade Winds $16.99 |
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`74 GERMAN LEIPZIG TRADE FAIR EXPO MEISSEN BISQUE PORCELAIN PLAQUE MEDALLION&BOX $95.00 |
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PATRICK ROY / JACQUES PLANTE MEDALLION TRADING CARD $39.99 |
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16″ MEDALLION CHOKER WITH WHITH SEED BEADS – trade beads $10.00 |
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old coin medallion Midwestern BEAUTY Trade Show HAIR $25.00 |
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Sun Medallion Earrings – Fair Trade Winds $12.99 |