I don't know about other places, but here in NYC, in the poorer neighborhoods in Brooklyn at least, there's a thriving system of taxi alternatives. You'll frequently see cars or vans packed full of people getting rides for a buck or two, and the cops don't seem to pay much attention to it.

In Manhattan or other parts of the city, I don't see how this kind of thing could compete with the yellow cabs or the car services. People have the money to pay the higher prices, and there are enough horror stories (true or not) floating around that very few would see it as worth the risk.