Damned if you do, and damned if you don't.
The linked article makes an excellet case against the medallion system. However, it seems to me this is a "damned if you do and damned if you don't" situation. Here's the situation here in Iowa City:
1) First, we had very little regulation. For years we had Yellow Cab, Big 10, and a handful of small cab companies (a few with a few cars and a few others that were actually one person with a cell phone and car.) When the economy really started to crap out a few years ago, EVERYBODY realized cab driving was easy money -- in a town with 50,000 people (30,000 students and 20,000 natives or so), we ended up with *27* cab companies. This made it more difficult to make money of course. But, even with that glut, it still proved impossible to get a useful cab ride after 2AM -- I tried to get a friend of mine a cab, and there were so many drunk students willing to hail a cab to haul them like 4 or 5 blocks that the cabs just loop between downtown and within 4 or 5 blocks of downtown; in over an hour, no cab would give a ~2 mile cab ride, so they finally had to drive home.
2) Solution? The city now requires the operators to have a landline and 24/7 service. (I dont know the landline requirement would hold up in court, since laws requiring a single vendor are illegal and we have a landline monopoly here, unlike most of the US), stricter insurance requirements, and so on. This was intended to eliminate the guys(/chicks) that just had a cell phone and a vehicle operating as a cab. What *really* happened? On paper, over a dozen cab companies went away but in reality, the number of cabs barely reduced at all, most of these cab companies all merged as "Big 10 Aardvark". Quite simply, the businessman who got organized first now collects $700 a month insurance plus $700 a month or so "service fees" to let cabs legally claim they are operating out of his office and dispatch number. But, in reality they will probably not get a single dispatch and actually use their own cell phones to get calls. Essentially, this didn't reduce competition much at all while raising expenses. And of course it's still impossible to get a cab after 2AM.