One reason to prefer the Medallion system is that both of the latter two options end up disproportionately impacting low-income people. The goal is to limit th

One reason to prefer the Medallion system is that both of the latter two options end up disproportionately impacting low-income people. The goal is to limit the number of cabs on the road without creating unreasonable barriers to other economic activity using the roadways. This can be done without Medallions, though. Cities could just require a license for taxis, like they do for many other businesses. If that license cheap enough that anyone can afford it (perhaps with a small business loan) but expensive enough to slightly deter entry, then it solves the commons problem without leading to cronyism.