*Not that it's really worked; the market will find a way. In this case with non-livery cars that you call and they pick you up. Legally only actual taxis can respond to street hails.
Some related info... as of April 2012 the NYC Taxi & Limousine Commission decided to open up street hails and beginning in July issuing 6000 permits to existing vehicles. Eventually, 18000 such TLC permits will be extended to for hire vehicles.
It's currently tied up in a lawsuit, and permits are not being issued, but expect it to go into effect and some of the 40k+ for-hire vehicles will be able to legally take street hails.