Before the collapse of communism Berlin was a divided city After the Berlin wall came down
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While communism Berlin was a divided city. At that time the welfare of the people of West Berlin was much higher than those of East Berlin. Therefore, since their income was more, their reservation price, that is the highest price that a given person will accept and still purchase a good, for all goods was higher meaning that the general standard of prices was higher. Taxis were no exception to this rule. So we can safely assume that before the Berlin wall came down fares paid by consumers in West Berlin were higher than fares paid by consumers in East Berlin.
When communism collapsed, movement between East and West Berlin became possible. Taxi drivers could now work both in East and West Berlin. So there now was only one market for taxi cabs which was also competitive. As there were two different fares until now a new equilibrium price should be found.
Before explaining how this would occur, I should probably explain what supply and demand are...