Friday, September 2, 2011

Most remunerative investment?

Which is the most remunerative, recession-proof investment? No, it is not gold or housing. It is the New York City Taxicab Medallion, a license to drive a New York City taxi!

A Bloomberg report says that the cost of a New York City cab license has risen more than 1,000 percent since 1980, a market that’s outperformed gold, oil, inflation, and the housing market. The medallion, the transferable aluminum plate found on the hood of all cabs, sold for $678,000 in July, up from $2,500 in 1947.

The story attributes its success to a small, tightly controlled supply of licenses and an unwavering demand from entrepreneurial immigrants, coupled with a huge demand for New York taxi cab rides. Econ 101 has another name for this - the power of monopoly!

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