What factor will determine price at which such licence trade

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Question: In some cities, the supply of taxi licences is fixed by city government, and a secondary market in such licences exists.

(a) What factors will determine the price at which such licences trade?

(b) Taxi operators argue that taxi fares are reasonable because they are just making normal returns, while economists argue that that taxi fares are too high because supply has been artificially limited. Whom should we believe?

(d) How would you devise a scheme for deregulating the taxi trade in this city which might be politically successful?

Reference no: EM131505206

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