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Uber Reverts Back to Surge Pricing in New York After One Day

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Re: Uber Reverts Back to Surge Pricing in New York After One Day

#51

Post by eru »

jlgreco wrote: post #40
barrkel wrote: post #35

Earlier quoted context omitted.

The correct response to a fixed supply of water is rationing, not either fixed or floating prices. Because without water you die, or catch diseases from poor substitutes. With a fixed price, whoever comes in first gets the most water; laggards die. With a floating price, whoever has the most money gets the most water; poor people die. Neither of these is morally superior. IMO.

I suspect water could be considered a special case, since it is so immediately necessary. What if, instead, we were talking about bread? Assuming that rich people are fairly rare, then raising the price of bread high enough to be expensive but not so high that people cannot pull enough cash out of their pocket to pay for it, then the effect seems to me like it should be an approximation of a ration. Clearly if Donald…

Even water is not a special case. If you want to help people, give them extra cash.

(There might be some justification for putting in some extra-windfall tax, though. I am not sure.)

Re: Uber Reverts Back to Surge Pricing in New York After One Day

#52

Post by eru »

ddlatham wrote: post #18
adamsmith wrote: post #10

In a disaster situation if there is no elasticity between price and supply then price gouging laws (social or legal) make a lot of sense. For example, if there's a fixed amount of water around regardless of price people shouldn't be able to raise prices. But in this case there IS elasticity between price and supply, right? Uber is claiming that they'll deliver better service by increasing prices, because supply will…

Even if there is no additional supply available, there still could be some benefit. If the price of gas were far higher, people may not fill up their tank all the way and only purchase what they really need. So instead of the first X people getting full tanks and the next Y people getting nothing from an empty gas station, in some scenarios everyone could get a smaller amount. However, the issue of poor people not ha…

Yes. But don't give people gas money. Just gives them money.

Re: Uber Reverts Back to Surge Pricing in New York After One Day

#53

Post by jbooth »

tptacek wrote: post #24
001sky wrote: post #15

Earlier quoted context omitted.

Is this a failure of capitalism No, not at all. All of the gas is in the hands of people who bought it. The supple constraints are not problems of incentives, they are problems of physics. Roads are down, plant is not working, traffic, security, etc. The reason anti-gouging laws exist is because jacking up prices has no benefit. It just keeps the poor people from having access to resources. 10 gallons of gas to a ric…

The idea that "jacking up prices" has no constructive purpose is strictly incorrect . When you fix prices on gas, and the relative value of gas shoots up, gas gets allocated to the people whose time is least valuable. When you allow gas prices to float in the same situation, gas gets allocated to the people whose time is most valuable. Neither allocation is optimal; it is indeed unfair for all the gas to go to invest…

I wasn't sure where I stood on the whole thing, but I think I agree that 200-300% of pre-crisis prices seems like a reasonable cap. Acknowledge that something happened but reign in the worst excesses of the market.

Re: Uber Reverts Back to Surge Pricing in New York After One Day

#54

Post by eru »

ynniv wrote: post #16

Amazing how people switch their principals regarding free markets when it suits them. Especially rich people. When consumer protection laws are drawn up, they will be the "end of America". When financial institutions have bankrupted themselves, they "need to be protected". It's "progress" to prevent people from bringing food onto private property so that you can massively overcharge them for unhealthy foods. It's "go…

It is interesting how your first two paragraphs don't connect with your third.

Shouldn't the right reaction against the hypocracy be to have firm and simple principles, like relying on price as a signal?

Re: Uber Reverts Back to Surge Pricing in New York After One Day

#55

Post by eru »

grayc wrote: post #44
rayiner wrote: post #38

While we're on the subject... Isn't it amazing what kind of rapid and effective response you get when the people in trouble are among the richest in the country (NYC/NJ coast) versus the poorest in the country (New Orleans)? I'm not complaining. I'm back in my Manhattan office two days after a truly epic disaster. I rode the train into work this morning, along the coast of Long Island Sound no less. It took ~10 minut…

Without getting into politics (too much)... there are a lot of reasons for different responses between this hurricane and Katrina. Parts of New Orleans being below sea level probably matters a lot. Plus, FEMA was pretty clearly mismanaged then and doesn't seem to be now. I think those two factors probably account for more of the variation than the wealth of the inhabitants does, and I'm sure that I'm unaware of other…

Also New York is richer partly because it is better managed.

Re: Uber Reverts Back to Surge Pricing in New York After One Day

#56

Post by prentis »

mchanson wrote: post #47
brilee wrote: post #11

... if prices don't go up, what's the incentive for gasoline delivery companies to make the extra effort to bring resources to a disaster-torn city?

It seems to me that humans, as a group, act compassionately during crisis. So compassion, or good marketing if you are a cold blooded corp. type, is a good reason to truck more in. FEMA can also, I'm sure, force a commercial concern to do it. They have lots of that scary tinfoil hat power. Many comments in here seem to look at this problem so coldly and rationally. Anti-gouging has a deep moral component. If some of…

Disasters are not a corner condition. Limited resources and unlimited wants is a permanent condition. Disasters just tweak the relative values of these parameters, which are reflected in prices. As always, the system adapts and re-routes the resources to where they're needed most.

Re: Uber Reverts Back to Surge Pricing in New York After One Day

#57

Post by gwright »

ynniv wrote: post #50
gwright wrote: post #46

Earlier quoted context omitted.

Yes, that is why I asked you define what you meant by 'strict'. What characteristic are you trying to identify with that term?

The parent wondered why the price of gasoline was not currently astronomically high to reduce demand to meet supply. My response is that this means of sharing a limited resource disproportionally burdens those less wealthy. Over the long term it is reasonable to say that a resource has a high price. In the short term, strict capitalism would say that a wealthy businessman makes better use of that tank of gasoline tha…

So charging more for a temporarily scarce resource is what 'ruins societies'?

How much gas do you think someone needs to transport themselves to another city? Imagine gas prices doubled so that someone had to spend $120 instead of $60 to fill their tank. Are you really trying to tell me that $60 is all that separates a functioning society from 'ruin'?

During a shortage, the high prices don't last forever, they only last as long as the shortage persists. Arguing as if the high prices are an ongoing problem for the poor or the rich doesn't make sense. In any case, it would be much better for the government to give the poor person $60 to purchase the more expensive gas (or the ice, or the food, or whatever was most critical for that person) rather than artificially manipulate market prices.

Re: Uber Reverts Back to Surge Pricing in New York After One Day

#58

Post by liber8 »

pavel_lishin wrote: post #32
liber8 wrote: post #30

Earlier quoted context omitted.

Maybe I'm misunderstanding your point, but your first sentence seems completely illogical. If there is a fixed supply of water, what better mechanism than price exists to efficiently determine the best use of that water? Not allowing people to raise prices means you end up with wildly inefficient allocation of resources (i.e. first guy in line says, "Man, there's a remote chance this flooding lasts for 2 weeks. Water…

As I recall, authorities turned away anyone trying to make a quick buck by selling essential supplies. Even with fixed prices, there was a limited number of goods. Driving a truck there to unload your wares still made economic sense, if you could do it at a large enough scale.

God forbid people be allowed to voluntarily exchange their money for essential supplies!

Snark aside, whether it made economic sense or not was up to those people to decide. Clearly, it didn't make economic sense for people to drive 1000 miles to sell generators at cost, because people stopped doing it once they weren't allowed to profit.

Posters upstream discuss rationing, which never works well either. It still ends up in an inefficient distribution of resources. This is logical. How can the person doing the rationing possibly know how much water each of 300,000 individuals needs? Maybe I have a bunch at home and don't need any, whereas my neighbor needs extra because he's severely dehydrated. Whenever rationing occurs, there is always increased corruption and graft, and a market for the coupons (or whatever tally method is chosen) always arises anyway.

Re: Uber Reverts Back to Surge Pricing in New York After One Day

#59

Post by tptacek »

001sky wrote: post #41
tptacek wrote: post #34

Earlier quoted context omitted.

There are lines miles long for gas. People do hoard in disasters. Gas in NY metro simply is more valuable now; for instance, as a substitute for the electric grid. Your reply is nonresponsive.

Gas in NY metro simply is more valuable now The amount you are willing to bid on something under duress is not the way to construct a proper-functiong market. Its important to seperate the short-term from the long-term, in this regards. In certain cases, its rational to obviate the market, into hierachy. see, for example: http://en.wikipedia.org/wiki/Hold-up_problem . This is precisely why firms are distinct from N-d…

I don't think you read my original comment. I think you skimmed it, concluded that I was arguing for abolition of all price caps to allow "free market capitalism" to solve all our problems, and wrote a philosophical response.

In fact, I don't believe we should abolish all price caps. I simply think the cap we've chosen is foolishly low. We have empirical evidence that a dense western urban area can survive on prices >300% higher than what they are in NYC now, and yet we've capped price increases at 10%. Fixing prices on a good whose intrinsic value is rapidly increasing, as gasoline's value clearly is in NYC, amounts to declaring a state-managed fire sale on gasoline. How can that possibly be a sensible response to a crisis of scarcity?

If you want to think about it from the other direction: price fluctuations in the gas market of 10% or more are not altogether uncommon, and empirically they do little to alter people's behavior. The 10% cap therefore amounts to a declaration that the market will not be allowed to alter people's behavior, despite the obvious fact that people are not behaving optimally --- and you can look at any gas station near NYC to verify that.

Finally, I just think you made a very flimsy argument upthread: that "jacking up prices", as you put it, serves no objective purpose. Well, no. Not true. At all. The knowledge that rising prices aren't an intrinsically bad thing will help in all sorts of situations where we have actual judgements to make in our lives.

Re: Uber Reverts Back to Surge Pricing in New York After One Day

#60

Post by ynniv »

gwright wrote: post #57
ynniv wrote: post #50

Earlier quoted context omitted.

The parent wondered why the price of gasoline was not currently astronomically high to reduce demand to meet supply. My response is that this means of sharing a limited resource disproportionally burdens those less wealthy. Over the long term it is reasonable to say that a resource has a high price. In the short term, strict capitalism would say that a wealthy businessman makes better use of that tank of gasoline tha…

So charging more for a temporarily scarce resource is what 'ruins societies'? How much gas do you think someone needs to transport themselves to another city? Imagine gas prices doubled so that someone had to spend $120 instead of $60 to fill their tank. Are you really trying to tell me that $60 is all that separates a functioning society from 'ruin'? During a shortage, the high prices don't last forever, they only l…

So charging more for a temporarily scarce resource is what 'ruins societies'?

Thoughtless adherence to an academic principal ruins societies.

it would be much better for the government to give the poor person $60 to purchase the more expensive gas

Why do you think that doubling the price will level supply and demand? It would take at least an order of magnitude, and the seller would have to conduct an auction in the presence of a representative sample of buyers in order to determine pricing. Also you're arguing for setting up an effective social program in the middle of an emergency. It's far more practical to suspend the free market for a week.

Unfettered capitalism in an emergency creates a divided, third world community of normal and desperate. If you want to argue anything, argue that.

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