The NYT discusses the issue of New York cabbies talking on the phone with hands-free devices – a common occurrence, though technically illegal in New York City. The discussion of remedies focuses almost entirely on the government enforcing its rules, with the free market alternative mentioned only in the last two paragraphs:
This being New York, the most effective means of cutting off a conversation may be found not in the offices of city regulators, but in the customer’s wallet.
“When I talk all the time, the passengers get angry,” said Mohammad Forazi, 42, of the Bronx. “They don’t give tips.”
In a totally free market, one could plausibly imagine a cab company that bills itself as a safer alternative, and bans its drivers from talking on the phone. One of the benefits of brands is that they have reputations to uphold, and thus have an incentive to make customers want to come back. New York cabbies, however, are totally indistinguishable. This is supposedly a feature of the cab cartel in New York and many major cities of the world, not a bug.