There is also a desirable number of cabs to be driving. Having cabs lined up idling on the side of every street, even if they are profitable, isn't optimal for

There is also a desirable number of cabs to be driving. Having cabs lined up idling on the side of every street, even if they are profitable, isn't optimal for the city. So there is a legitimate reason to provide a limit. Of course it is clear that the medallion system has other problems like raising barrier to entry. Maybe it would make more sense if the city rented/auctioned the desired number directly on relatively short timeframes.