Labor Economics 6th Edition by George Borjas

Exercise 2

Taxicab companies in the United States typically own a large number of cabs and licenses; taxicab drivers then pay a daily fee to the owner to lease a cab for the day. In return, the drivers keep all of their fares (so that, in essence, they receive a 100 percent commission on their sales). Why do you think this type of compensation system developed in the taxicab industry