jimbo wrote:
If the number of passengers remain static, and their spend remains static, profits must fall, because operator costs have doubled, with twice as many cars in town. where a town was served by 100 cabs costing, say, £10K each, the total would be £1,000,000. double the number of cabs, and the vehicle costs also double. (to £2,000,000) add on the insurance and other ancillary costs, (fuel used would remain the same) and everyone is losing money, are the not?
I'm not an economist, as you may have noticed, but the phrase "diminishing return" springs to mind.
A reasonable point, but no one's saying that everyone would be running their own taxis, the numbers are just illustrative to demonstrate that the bare number of taxis exaggerates the increase in supply.
But if drivers are less profitable then they'll clearly they may exercise the option of driving for someone else, it's all about choice, which is after all the engine of the market that you allude to - Adam Smith's 'invisible hand'.
But profit isn't everything - some guys might just like to run their own motor, for whatever reason. When I first started on multi-driver vehicle things like changeovers, cleaning the car and fuelling up etc always got on my tits - I was usually the one being made a monkey of.
![Confused :?](./images/smilies/confused.gif)