So I'm a bit confused by your phrasing. Are you saying that the tragedy of the commons isn't something that actually happens? I agree with your point that the

So I'm a bit confused by your phrasing. Are you saying that the tragedy of the commons isn't something that actually happens? I agree with your point that there are natural pressures that would keep the number of taxis down if the artificial limitation was removed. It's just that I don't think that the natural equilibrium point financially is going to be the optimal level in terms of getting people where they want to go efficiently. In my mind, the entire transportation system is useful to provide a service to individuals and other sectors of the economy, and if it's not doing that well it doesn't matter much if the people working in transportation are at a natural equilibrium. I'm also not saying that the medallion system is the right way to handle the situation. A taxi or car on the road uses up some common, limited resource (space on the road). Maybe you'd have more luck charging for that resource more directly, like a congestion charge?