NCPA - National Center for Policy Analysis

Taxi Medallions Sell for $1 Million

October 26, 2011

Two New York taxi medallions -- aluminum plates that grant the right to operate a yellow cab -- changed hands last week for $1 million apiece, the highest recorded sale since the city's modern livery system began.  Since the city of New York issued its first batch of medallions in 1937, their value has continued to grow rapidly, while the number of medallions available for purchase has been tightly controlled.  The increasing population of the city and heightened use of taxis have also contributed to the high price, says the New York Times.

  • The first medallions sold in 1937 for $157.50 (in current dollars).
  • The secondary market in medallions and its private transfers began after World War II, at the starting price of $2,500.
  • With a rate of growth of 1,900 percent in the last 30 years, medallions have outpaced the Dow Jones Industrial Average (1,100 percent), as well as gold, oil and the American house.

The sizable investment in the medallions can be seen as a vote of confidence in the future of the city, though fears of an artificial medallion bubble are difficult to shake.  What is clear, however, is that with 13,237 medallions in the city, the business of buying and selling them is significant.  Interestingly, it is significant enough in and of itself to warrant the creation of Medallion Financial -- a specialized lender in the field. 

Investors and consumers alike would do well not to underestimate the complexities of the taxi cab system. 

  • Among the little-known distinctions is the difference between corporate and individual medallions.
  • The prior can be lent and used freely, whereas the latter must be driven by the medallion's owner on occasion.
  • This requirement limits its usefulness and its value, holding it to a still-not-insignificant $700,000.

Source: Michael M. Grynbaum, "Two Taxi Medallions Sell for $1 Million Each," New York Times, October 20, 2011.

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