Indeed, that was the main reason Uber could be cheaper and fill a void. Not only medallions were expensive, they were also rare and therefore there were not enough taxis on the streets.
The same effect happens in some European cities, Paris for example. I would not necessarily call that corruption, it just is the effect of a limited asset (“medallions” or taxi licenses) being valuable. In Paris taxi licenses became an investment for the drivers: they got one in the 70s when they were cheap and would sell it when they stopped working and that would contribute to their pensions. When, in response to Uber, Paris authorities discussed increasing the number of licenses, drivers pointed out that the loss in value would lower their pensions.
The situation in Europe never got as bad as in the USA, however. Maybe the reason was that taxis compete with a much better public transport system in Europe.
