Deregulation of the Taxi Industry in Ireland

When I lived in Dublin, Ireland last summer, I noticed the large number of taxis for the European capital of only 1 million people. I commented about this to my Irish co-worker who explained to me the recent deregulation of the taxi industry in Ireland. Before deregulation, a shortage of taxis existed in Dublin and getting home from a pub on the weekend often involved waiting for over an hour in a taxi queue. I never had to wait more than a minute to catch a taxi, even in the residential area where I lived in Dublin.

This article from an economist at the University in Dublin written in 2004 describes the history and results of deregulation. Regulation of the taxi industry began in 1978 (due to pressure from incumbent license holders) and made taxi licenses scarce and expensive. The Irish economy boomed in the 1990s and the number of taxi licenses remained at nearly the same level. The average taxi license cost I£80,000 in 1997 and after deregulation in 2000 only cost I£5,000. The number of licensed taxis rose from 2,722 in 2000 to 8,609 in 2002. Taxi drivers protested the deregulation, claiming that their income would decrease, the quality of taxi service would decline, and open entry would encourage criminals and rapists to become cabbies. While the individual income of taxi drivers did decline, the consumer gained from the decreased waiting time. No other signs of decreased quality in taxi service have been observed.

With the meltdown of the Irish economy recently, taxi drivers do have a genuine grievance about their loss of income. Tourism is down and less people can afford to take taxis. Additionally, many illegal immigrants work as taxi drivers. Does Ireland need that many taxi drivers? The joke in Dublin is that anyone with a car is a cabbie. Should entry into the market be made slightly more difficult or is the (nearly) free market the best for Ireland?