Earlier quoted context omitted.
The argument I've heard before (about the medallion system in the US, which had the same result as what GP described with licenses) was that since roads are a limited resource, this prevented too many taxis from causing excess traffic just driving around looking for customers. It's an interesting argument because having the app connect customers means they don't have to drive around aimlessly, which almost sidesteps…
They could fix the whole system by issuing as many medallians as people want. Fixed reasonable price, renewable each year. You have to meet certain criteria for public safety, like good driving record, not a sex offender, the car must pass annual safety inspections, etc. But other that, let the market decide how many taxis.
Also you do not want to give out so many medallions that owners cannot possibly make a living. Now transferability outside selling whole business is stupid.