I drove a taxi as a summer job in college in my hometown (small city near Boston). I thought I would share a few observations.
In our city, there were three companies that owned the medallions. An unwritten rule: The city was divided into territories, and we weren't supposed to pick up in the other territories unless we were flagged down. If someone from another territory called our company, they were told to call one of the others and arrange for the pickup.
75% of our business was call-ins or pre-arranged pickups (students, travellers, sometimes people with revoked licenses). Another 20% was pickups at the taxi stands outside the subways stations or hotels. There were a very small number of people flagging us down on the street. In Boston, there are many more street pickups. Note that this was all before the cellphone era.
We also couldn't pick up in Boston, unless someone called us in advance. Even if we were flagged while driving through the city (for instance, coming back from a drop-off), we had to ignore. This was by law, to prevent cabs from Cambridge or other towns from taking business away from the Boston cabs (and Boston cabs from taking business from Cambridge and the 'burbs, etc.). It made airport runs a bit of a risk -- while the fare was higher, since it was almost impossible to be able to pick someone up after dropping off someone at Logan, we were basically losing the opportunity to take other passengers for 30 minutes (or longer, depending on the traffic).
I should also add that rates in Boston were cheaper than other nearby cities and towns. This would make some passengers angry -- "it only cost me $X to come from the airport. Why is it $X + $20 now?"
We got a cut of proceeds off the meter, plus tips. Part-timers had to take the worst shifts, and the worst cars -- old LTDs and Ford Fairmonts that often had major mechanical problems. It was a poor way to make extra money -- unless you had a busy shift (rush hour, or rainy days) there was lots of down-time, which meant fewer receipts.