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The most expensive part of running a taxi, for a large firm, is paying the driver's wages. If you don't have a driver you can half your costs, which allows you to drop your fair. That in turn makes your service much more attractive.
Public transport runs well below capacity for most of the time (I was a bus driver for Stagecoach). The fares collected only go a little towards the cost of providing a service. If it wasn't for government, and local government subsidies, most services would be withdrawn.
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