Counterpoint: Panama City, Panama. You're not wrong in what you say regarding the necessity of public transportation and the benefit of taxis instead of person

Counterpoint: Panama City, Panama. You're not wrong in what you say regarding the necessity of public transportation and the benefit of taxis instead of personal vehicle ownership, but the free market will have no incentives to reduce congestion until such point as people would rather walk. Panama City has less incentives to clog the roads in that taxis are universally unmetered; where taxis are paid per-minute, congestion is profitable. Despite the lack of metering and a recently-introduced subway, Panama City has terrible congestion. There's always a taxi when you want it, but a lack of regulation means that it will almost certainly be in a barely-roadworthy condition, and if you are traveling at peak hours you may as well walk. I'm told it used to be worse, that taxis would not even take you if your destination were more than a short distance away; I've only encountered this a few times. Also, while many drivers are honest, any sign that you are not a local is liable to result in your being asked to pay several times the going rate. This is the free market at work. If you are going to invoke market forces, you need to make sure there are sufficient incentives to not wind up with a worse problem than not having a taxi when you want it. What springs to mind would be taxing taxis in proportion to your congestion problems. I am not sure that would be an improvement.