I've commented before on HN with this important cautionary tale from South Africa: In the late 1980's the apartheid government (which was taking very tentative steps towards reform) decided to cheaply "solve" the problem of public transport in poor, black areas, while encouraging small business. Thus was born the unregulated minibus taxi industry. It all started off well, but soon, instead of a Free Enterprise utopia…
And for a counter example, New York is very stingy with its medallions, which has created powerful special interest groups, and a system that serves drivers and passengers poorly in many respects.