Economics of Public Issues (19th Edition)
Economics of Public Issues (19th Edition)
19th Edition
ISBN: 9780134018973
Author: Roger LeRoy Miller, Daniel K. Benjamin, Douglass C. North
Publisher: PEARSON
Question
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Chapter 16, Problem 1DQ
To determine

Whether the resale price of medallions will rise or fall in the future and the reason for such change?

Expert Solution & Answer
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Explanation of Solution

  • In most cities of the world, it is necessary to purchase an expensive license often called medallion to operate a taxi or a taxi company.
  • The resale price of those medallions will increase. The reason for such change is that issuing of medallions requires a huge investment.
  • When the medallion is resold, the person tries to cover the cost of the money invested. This trade can be termed as a two-sided market operation as it provides platform to the consumers as well as sellers to increase their market activity.
  • Such practice will become more popular in the coming future because of development in the technology and higher connectivity through internet.
Economics Concept Introduction

Concept introduction:

Market:

Market is a place where the buyer of a good and the seller of that good meet. Market in the modern era has helped in resolving the problem of barter system through trade. It has also helped in resolving the problem of double coincidence of goods.

Two-sided market:

It is the modern form of market in which an intermediary firm helps to connect a group of sellers with a group of buyers. This is also known as a platform market, as it provides a platform to the sellers as well as the buyers.

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