Vancouver’s taxi shortage, the worst in Canada, is both a problem and an opportunity

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taxis-chart

Ever tried hailing a cab in Vancouver? Trust us: it’s a pain. Regulations have twisted the laws of supply and demand, causing Western Canada’s biggest metropolitan area to have fewer taxis per capita than any other city in the country. That’s bad news if you’re trying to get home after a weekend bar hop—but a potentially great boon for entrepreneurs.

Not surprisingly, it’s also been awesome for the incumbent companies. Vancouver’s taxi plates (or licences) sell for double the rates in Toronto or Montreal, and five times more than in Edmonton. Plate cost is a good indicator of the local supply’s relative sufficiency, says Dan Hara, whose Ottawa-based economics firm tracks the taxi industry. “Every time you see a high taxi-plate value, it can be shown that a lower price with more taxis would serve the public better.”

He adds, however, that it’s very difficult to reverse the situation. “Adding taxis back to the system reduces the plates’ value,” notes Hara, something existing plate owners don’t want to see. Currently, a Vancouver bylaw restricts the number of permanent taxis to 588, and the city’s four cab companies fiercely lobby to keep that number from rising. (Interestingly, they may be doing themselves a disservice. Hara’s research shows that more people would take cabs if they came more quickly. In other words, by restricting the market to retain their big slice, cabbies are also restricting the size of the pie.)

As with any supply shortage, opportunity beckons those who can fill the void. Indeed, Vancouver was home to the first car share in the English-speaking world, Modo. It was also the first Canadian stop for Daimler’s Car2Go; business was so good, the service doubled its Vancouver fleet in just two years. Car2Go, it merits noting, focuses on giving urbanites access to wheels for running quick errands on a whim—in other words, like a taxi.

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