The London “black cab” taxis are amongst some of the expensive in the world. They complete to some extent with minicabs, which tend to be cheaper.

Introduction

The London taxi market shows how a regulated industry interacts with microeconomic and macroeconomic issues. The contrast between black cabs and minicabs reveals a distinct market structure characterized by significant entry hurdles for black cabs, resulting in a monopoly on street-hail services.

Concept & Application

London’s taxi market is divided into two categories: black cabs (licensed taxis) and minicabs. Black cabs have monopoly power since they have exclusive rights to pick up passengers on the street. This monopoly is strengthened by severe laws that compel drivers to complete arduous tests, background checks, and medical examinations, as well as pay high licensing fees.

Conclusion

The structure of the London taxi market, which is characterized by black cab monopoly power and competition from minicabs, demonstrates the influence of high entry barriers on market dynamics.