Why are taxis so expensive?
 

So what is the reason that taxis in Japan are so expensive? Is it the fuel costs? The cost of the cars? The cost of the taxi license?

I think it is relative. Everything in Japan is expensive.

One thing about owning cars in Japan is the inspection they do every two-three years is VERY expensive. I am assuming that taxi's must go through the same inspection for licensing.

Also getting a license is very expensive. My cousin flew to Vancouver, stayed 6 months, got a BC drivers license and moved back to Japan and TRANSFERED his license to a Japanese one and he did not have to be retested due to some mutual arrangement. He said it was about the same cost and he got a great vacation out of it as getting a driver's license in Japan.

Gas is very expensive and so is the insurance.

I'm sure those who are living there now can be more detailed about the cost of driving in Japan.

If you think it's expensive now, wait until the trains stop running at night.

That is simple supply and demand though. Why doesn't someone come into the market with cheaper prices during the peak hours? What are the cost barriers?

While driving is expensive on the whole actually buying a car is reasonable and fuel isn't that expensive compared to Europe. On-road costs get you here.
Generally though I wouldn't say everything in Japan is expensive, not anymore, lots of places have caught up. For example most people I know reckon Australia is at least as expensive as Japan.

Price will also vary by where you are in Japan. For instance Kyoto Taxis were much cheaper than Tokyo. Usually as a whole Japan is expensive. I think last year Tokyo was the most expensive place in the world to buy a Big Mac.

IIRC the most expensive place was Switzerland.
McDonalds in Japan is cheap.

Taxis are another story. I think the price regulations were relaxed several years back - so companies have some flexibility to compete on price. But there are still limits. (*For example some "one coin" taxi companies charge lower fees at the start of the trip and smaller fare increments, but shorter distances between the increments. So they're somewhat better for short distances). Basically the prices are fixed ... but the market seems to support these prices ... and Tokyo has an excellent public transport infrastructure... so ... if you don't like the price of taxis, take the subway.

Last year I visited London for the first time in years, and I thought that everything there was far more expensive than in Japan, including the taxis.

I live in London and I completely agree with you!

(You can dine out in the centre of Tokyo for less than the cost of cooking something at home in the suburbs of London - and I know all about how to cook well as well as frugally)

However, at least the taxi drivers in London usually know where they're going. I respect the reason taxi drivers in London are expensive - which is partly explained by this.

This is pure speculation and I have absolutely nothing to back this up, but I wonder if there's a high tax imposed in taxis, making them expensive, so that fewer people will take them.

Most of the streets in Tokyo are quite narrow. If you compare it to say New York, there aren't as many major avenues like Madison, Park, 3rd, etc., and I don't think Tokyo can handle all that much taxi traffic.

Any thoughts?

Not on taxis as such, but definitely on cars in general. Shaken, parking, gasoline, tolls, you name it: driving in Japan is horribly expensive.

Private taxis usually have less income than the requirement for declaring consumption tax - So those guys are making 5% more than the big taxi companies on the same fares.

I was in Tokyo (Akasaka) at the end of October and in London (Kensington) 4 weeks later and the sticker price shock of England (hotels, food, taxis, etc.) made me shake my head more than once. Now, I've made a decision to avoid staying even a night or two in London on my way to EUR regardless of the inevitable LHR connections I get while travelling from LAX via AA. It's just become that ridiculous.