"Muni regulations hold the cost where they are, not the cabs, not competition, not the free market. Because they do not operate in a free market."

That's certainly true and its also true that the muni's regulation is keeping cab fares as high as they are. That's why cab medallions fetch, or used to fetch, such a premium in the (closed) market. When the price of a cab permit exceeds the cost of a cab, you know the fix is in. 

This rigged system has served the cab owners well, protecting them from competition while allowing them to skim a premium from customers with no other choice. Its also served certain assembly members well who have collected lots of contributions from cab company owners. It has not served the public who have to use cabs.