A slightly longer explanation: We can reasonably assume that it's easy to move back and forth between cab driving and, say, delivering groceries. Therefore both occupations have to be about equally desirable. (Otherwise nobody would go into the less desirable one.) If we all increase our tips by $2 per ride, then delivery drivers all prefer to be cab drivers, and start flowing into the taxi industry, bidding up the rental price of a medallion. If the rental price of a medallion goes up by, say, $1.50, then cab driving remains more desirable than before (and hence more desirable than delivery driving), so the influx continues and the medallion price is driven up further. This can't end until the medallion rental is driven up by a full $2.