What is the transitional gains trap? In New York, in order to be legal a cab driver must have a medallion (i.e., a license) to operate
With respect to New York cab drivers who, if anyone, received transitional gains? What if the medallion program were ended tomorrow. Who would be harmed?
The transitional gains trap states that although regulation can benefit the regulated industry initially, in the long run any gains will be competed away. However, although the regulation provides no benefits in the long run, the removal of the regulation produces transitional losses. The individuals who received transitional gains in New York City were those cab drivers and companies given the initial medallions. All subsequent medallion owners received little to no benefit. If the medallion program were ended tomorrow, all holders of medallions would be harmed as the current value of their medallion would disappear.
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Indicate whether the statement is true or false
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a. True b. False