Developed-world cities regulate the number of taxis on their streets so every driver will be assured a certain amount of business. In return every taxi is periodically inspected for safety, and must charge the same metered rate -- about $1.50 or $2 to get in the cab; about $1.50 per mile; and wait time of about $12-$30 per hour, which kicks in when the cab is stationary or moving less than ten mph. (This compensates the driver for traffic.) Thus a two- or three-mile trip costs about $5 in rich countries.

In much of the developing world, however, there is little or no regulation of the taxi business. Anyone who has a car can become a taxi driver. It thus becomes dog-eat-dog for customers, with a bargaining system evolving that favors locals who know the score, and rips-off those who don't.

What's the best way to save money and avoid being cheated when traveling by taxi?

There are several ways you can avoid being "taken for a ride" by a cabby in an unknown city. Most methods revolve around doing your homework beforehand--as always, the smarter a consumer you are, the less likely you'll be ripped off. So heed the following tips and enjoy a hassle-free cab ride to the destination you desire.

For starters, always use an established taxi company. This is easy in a developed country but in a developing country you are on your own. Independent, non-licensed drivers are not obliged to follow industry regulations, though they will try and tempt you with lower fares. If you can't distinguish a legit company from a fraudulent one, inquire at the airport information desk or your hotel's concierge desk. They might also be able to help you with any communication problems you may encounter -- if you don't know the language, have a local write down your destination on a piece of paper for the cab driver to read.

You can also ask these same resources what the charge basis is for cabs in the area. Some drivers will charge you a metered, per-person rate. Other cabbies will try to tack on surcharges for baggage, rush-hour service, or additional passengers. Find out if these unusual fees are to be expected in the area you are traveling through before getting in the cab. Also, be on the lookout for drivers in foreign countries who expect you to haggle over fares. In these cases, negotiate your price first.

The key to successful bargaining is to ask the fare before getting in. Once you sit down the driver knows he has you, and you're off for a ride. Open the front door or lean in the window to get a quote to your destination. If it seems too high (and it probably will), immediately reply, "No, that's too much," and make an appropriate counter-offer. Note that a $10 fare in developing countries doesn't happen every day for every driver. Most short trips around downtown should probably cost no more than $2 or $3. (CONTINUE...)