The Economics, Business & Enterprise Association

The Professional Subject Association for Teachers and Lecturers of Economics, Business and Enterprise

A/AS Level Economics Market failure Resource 2 - Work sheet on taxi-licensing

In 2 ! the "#T $"ffice of #air Tradin%& published a report on ta'i ser(ices recommendin% that the restrictions on number of licensed ta'is be abolished) The report found that these restrictions len%thened *aitin% times for consumers and created a mar+et for ille%al cabs) The %o(ernment decided not to chan%e the la* but %a(e po*er to local authorities to remo(e restrictions unless the, could demonstrate that these restrictions benefited the customers in their area) Since then, 2-. of authorities ha(e remo(ed restrictions) Identif, t*o reasons *h, the /o(ernment mi%ht ha(e imposed restrictions on licensed ta'is)

Identif, T0" economic reasons *h, this mi%ht lead to /o(ernment #ailure)

/i(e "1E economic ar%ument for lettin% local authorities decide *hether to remo(e restrictions)

Assess *hether liberation of this mar+et *ould lead to an increase in social *elfare2

EBEA | 2008 |

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