Medallions were first issued in 1937 when the city created a licensing scheme, setting the number of cabs at 11,787. This number remained fixed until 1996.[107] Because the medallion system artificially restricts the number of cabs, it has been criticized as an entry barrier to the New York City taxi market which has in turn created a black market for illegal taxicab operation in areas underserved by medallion cabs.[108] Because the cost of leasing a medallion is so high, the system cuts into the income of drivers and raise costs for the passengers. On the other hand, some transportation analysts contend that cities with no barriers to entry to the taxi market end up with an abundance of poorly maintained taxis. They say that a medallion system helps the city to better regulate taxis and enables the city to raise the standards of all taxis.[109]

Medallions are sold from the City at infrequent auctions, or by a medallion owner. They increased in price from around $2,500 in 1947 to $280,000 in 2004.[110] The medallions, which could be sold for a $10 renewal fee during the 1930s, are now worth hundreds of thousands of dollars, with fleet medallions topping $1,000,000 in 2011.[111][112] In 20132014, values were around $1 million[113] to $1.3 million.[107] By comparison, in 2004, a taxi driver had an average yearly gross revenue of $90,747 and a net income of $49,532.[110]Because of the historically high prices, medallions (and most cabs) are owned by investment companies and are leased to drivers ("hacks"). An auction was held in 2006 where 308 new medallions were sold. In the 2006 auction, 254 were designated as either hybrids taxis and 54 were designated as ADA-accessible taxis.[112] Between November 2013 and February 2014, the city auctioned 368 new medallions, all of which was earmarked for use with a wheelchair-accessible vehicle.[107][113]

Over the years, many medallions once owned by individual drivers were sold to large taxi fleets. As of 2012, about 18% of all taxis were owner operated, while the rest were leased;[1] this is a decline from the 29% ownership rate in 2006.[35]:32 Additionally, some taxi drivers might begin their shifts by owing money to the taxi fleet companies that hire them, so they may spend a substantial amount of their day trying to earn a net profit.[1]

Starting in 2011, medallion prices dropped considerably, likely due to competition from ride-share services.[101][114] As of October 2016, medallion prices had dropped to around $500,000 in value, with one medallion dropping to $250,000.[115] Because of the decline in medallion prices, many taxi drivers started working for ride-sharing services instead.[114] There was also a decrease in taxi usage: in November 2016, there were 336,737 daily trips that netted $4.98 million, a decrease from the 463,701 daily trips netting $5.17 million in November 2010.[116][117] However, in mid-2016, after a five-year decline, taxi usage began to increase again.[102] Due to this competition, medallion owners sued the city and Uber in November 2015.[118] By 2017, the 60,000 ride share vehicles in New York City outnumbered the city's medallion vehicles at a ratio of almost 4 to 1,[116] and many medallion owners faced the prospect of bankruptcy or severe debt because of the low medallion prices, which few entities were willing to buy.[101][3] Medallion holders had trouble making payments on the loans that they borrowed to pay for the medallions.[3] This, in turn, led to several high-profile suicides of taxi drivers who had seen decreases in profit due to the proliferation of ride-share vehicles.[119] In August 2018, the city voted to stop issuing new ride-share licenses for one year, as well as enacted a minimum wage for for-hire vehicle drivers.[4][17][120] The vote was intended to regulate the for-hire vehicle industry and prevent taxi medallion prices from falling further, but Uber and Lyft criticized the restriction, stating that it would have a negative impact on commuters in the outer boroughs.[120]