Despite claims of an oligopoly in the Madison cab industry and the existence of a barrier to entry, many deem the regulations for new cab companies necessary and beneficial to the city of Madison.

Regulations being debated include the prohibition of redlining, which is when operators fail to serve certain parts of the city, such as low-income neighborhoods. Also, there are regulations in place forcing cab companies to remain open 24 hours a day, seven days a week in order to ensure the safety of taxi-users. Regulations of this nature have been seen as an unfair mandate for beginning entrepreneurs.

According to Peter Carstensen, professor of law at the University of Wisconsin, such regulations create barriers to entry into the market.

“It restricts competition, and it is illegal,” Carstensen said. While Carstensen admitted the city removed one major impediment ? the requirement that an applicant establish a reason for the necessity and convenience of a new cab company ? the industry remains an oligopoly.

“There are no economic reasons why any of the existing cab companies would cease to provide 24-7 service,” Carstensen said, adding that cab companies make enough money with overnight service and that even without the regulations they would continue to remain open all night.

However, Rick Nesvacil, general manager of Madison Taxi Company, said his cab company would have to re-evaluate its hours if the city ordinance no longer mandated taxi companies to remain open 24-7.

“We would lose money,” Nesvacil said.

The Badger Cab Company is also uncertain as to whether or not it would remain open late at night without such regulations.

“It’s really hard to say– we would try to stay open late. There isn’t that much business late at night,” Tom Royston, general manager of Badger Cab, said.

Bill Knobeloch, transportations operations analyst, is aware Madison cab companies may not stay open all night without the regulation.

” A lot of companies told us if they didn’t have to run 24 hours, they wouldn’t,” Knobeloch said.

Carstensen said that the cab fares are too high in comparison with the rates in other cities and that the quantity supplied is too low. The hallmark of a monopoly, Carstensen said, is that the quantity of supply is reduced, and in Madison, at peak periods of demand there are limits on the quantity supplied. Carstensen said getting rid of the regulations would reduce economic loss.

“I’m trying to get city decision-makers to pay attention to economics,” Carstensen said.

Carstensen said he might take the issue to court during the summer if he has the time.

City Council president Mike Verveer also said cab rates are on the high side; however, high rates are a tradeoff. Cab drivers can make a fulltime living off of driving a cab.

Despite Professor Carstensen’s claims Verveer said regulations on the cab industry are beneficial, and those who are vying to get rid of such regulations are a minority.

“There is no consensus in the legal community that our rules aren’t legal,” Verveer said.

In fact, Knobeloch said the Madison restrictions are scarce in comparison to other comparable cities.

“Anybody can apply at any time,” Knobeloch said.