Chapter 92 Question ○83

Why is there a flat rate of forty-five dollars for a taxi from JFK Airport to any destination in Manhattan, while taxis elsewhere in New York City charge by the meter? (Travis Syfy Parison) According to New York's current standard taxi fare formula, the estimated fare from Kennedy Airport to each destination in Manhattan is between 30 and 70 U.S. dollars under different traffic conditions.Why, then, does the New York Taxi Authority impose a fixed fare of $45 from JFK to Manhattan? Kennedy Airport is one of the busiest international ports in the United States.Tourism is a major industry in New York, and it is in the city's interest to give first-time foreign visitors a great experience.Because many foreign tourists have limited English proficiency, they are easily deceived in business transactions, including being ripped off by taxi drivers.So that tourists and other inexperienced travelers don't have to worry about drivers taking long detours or otherwise charging unfair prices, the New York Taxi Commission imposed a cap on taxi service from JFK to Manhattan.

Determining and enforcing property rights over any good requires a commitment of real resources.Sometimes, the end result isn't worth the effort. The difficulty of enforcing property rights helps us understand why certain ways of managing resources are more efficient than others. Behaviors that serve the limited interests of individuals often harm the interests of the group to which the individual belongs. Adam.Smith's invisible hand rests on the implicit premise that individual rewards depend only on absolute performance.But in fact, most things in life are determined by relative position.