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HAVANA — Cubans with classic American cars — or even rusty Russian sedans — are being encouraged to apply for taxi licenses and set their own prices for the first time in nearly a decade as the communist government turns to the free market to improve its woeful transportation system.

New taxi licenses have not been approved since October 1999, and it is not clear how many new cabs will be allowed.

Because buses and licensed taxi services are overwhelmed, hitchhiking is common, and many of those thumbing it hold up peso notes, offering to pay anyone who picks them up.

The new law appears to be aimed partly at controlling rampant competition from unlicensed people using their cars as taxis.

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