Business, 16.04.2020 22:10, zmirandalove100

Nashville is considering two options for limiting the number of cabs operating in the city. The first option is to charge a very high license fee each year on each cab, and the second option is to charge a per ride tax. Assume that the long-run supply curve is horizontal in the unconstrained competitive equilibrium, there is free entry and exit, that individual cabs face increasing marginal costs of giving rides, and that the costs facing a cab don't depend upon the number of competitors. Comparing the two options by considering the effects on welfare and government revenue, which is the best option and why?

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Nashville is considering two options for limiting the number of cabs operating in the city. The firs...