My theory of taxi allocation in Sunyani

I am now writing to you from beautiful Brong Ahafo, where the cars are strong, the chameleons are good looking, and all the roads are above average.

Sadly, though the cars are strong, there is a shortage of shared taxis here unlike any I have encountered anywhere in Ghana. (Shared taxis run routes, and pick up anyone who wants to go on that route. Most of the time, they are a convenient and inexpensive means of transport.) Getting a shared taxi in Sunyani involves standing at a corner and yelling where you want to go as taxis go by, and then when one stops, rushing to beat the hoards all going for that taxi. The first time I was there, I got a taxi because a driver felt sorry for the poor clueless white girl and made it a point to get me in his car.  The next time, I got a taxi based on my rushing merit, which was infinitely more satisfying.

Why don't more people run taxis here? Why don't they raise the price of taxis? I later discovered that the taxi shortage was being caused by a diesel shortage.  Many of the taxis converted to run on diesel were not running. Yet again, things that appear to make no sense to an American economist have a logical explanation. The diesel shortage was temporary; sticky prices and fixed capital costs prevented the market from clearing.

Given the shortage, what is the appropriate way to allocate taxis? Free marketers might suggest they be allocated to those willing to pay the most. However, if your concern is allocating them to those who have the most need for them, and you think the welfare created by this outweighs the extra supplier surplus that would go to the taxi drivers, there are other ways of allocating them, which might be more efficient in a context of high income inequality. One, the use of lines, would allocate taxis to the people most willing to spend their time waiting for the taxi. Another, the one actually in use, is to make people spend effort.  Those most willing to run, fight, and look foolish must be the ones who value the taxi service the most.