The two types of drivers bear different marginal costs for each taxi ride they give. The latter, who own the cars they drive, bear the cost of the fuel for the car, their own time (valued at nearly zero in Ghana) and the depreciation of the vehicle due to the ride. The former, who rent the car at a fixed rate, don’t bear the last cost—the vehicle depreciation. Therefore they are willing to accept lower prices for each taxi ride.
The driver who told me this of course owned his own car, and was trying to convince me that even though the cost of a taxi across Tamale is always 3 or 4 GHC, it wasn’t fair to pay him less than 5 cedis.
Unfortunately for him, as much as I like a good economic theory, I can also identify a good economic strategy: in this case, using the length of a taxi ride to badger an expat into paying more. (The driver also happened to take the longest possible route through town.) I paid him 4 GHC, consistent with providing incentives to honor the agreed-upon price.