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The Economics of UberX in NYC

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Re: The Economics of UberX in NYC

#11

Post by maerF0x0 »

wdewind wrote: post #4
haddr wrote: post #3

The most important giveaway of this post is this: "But at the end of the day, their business model boils down to taking a 20% rake of a large commodity services business while pushing assets, costs, and liabilities off the corporate financial statements and onto the shoulders of their not-quite-employee-partners."

And yet people still choose to drive for Uber. Are they all being taken advantage of?

And yet people work for walmart, are they all being taken advantage of?

There is a claim that some positions of power make people unqualified to make choices. Think student/teacher or adult/minor sexual relations or maybe some of the ideas around accredited investors -- non-accredited investors are not allowed to invest in certain types of assets to protect them from predatory practices.

I'm not commenting on morality here, but the state of current law.

Re: The Economics of UberX in NYC

#12

Post by mason55 »

untog wrote: post #10
pbreit wrote: post #8

This guy's whole article falls apart based on one terrible assumption: that Uberx behaviors are similar to taxis. There are a whole host of reasons why this is not the case. Taxis are more likely to hang out in dense, Manhattan areas contributing to short and slow rides. Riders would much prefer to take an Uberx to the airport than a taxi. Surge pricing. Etc.

Why would people be more inclined to take an UberX to the airport than a taxi? The taxi has a flat fare. And from the map view I've seen using Uber, UberX's absolutely do hang around in dense Manhattan areas.

> Why would people be more inclined to take an UberX to the airport than a taxi?

In the outer boroughs there frequently ARE no taxis. So you have a bunch of Uber rides that used to be car service rides which distort the numbers.

> The taxi has a flat fare.

Only from JFK to Manhattan

Re: The Economics of UberX in NYC

#13

Post by travisp »

untog wrote: post #10
pbreit wrote: post #8

This guy's whole article falls apart based on one terrible assumption: that Uberx behaviors are similar to taxis. There are a whole host of reasons why this is not the case. Taxis are more likely to hang out in dense, Manhattan areas contributing to short and slow rides. Riders would much prefer to take an Uberx to the airport than a taxi. Surge pricing. Etc.

Why would people be more inclined to take an UberX to the airport than a taxi? The taxi has a flat fare. And from the map view I've seen using Uber, UberX's absolutely do hang around in dense Manhattan areas.

The flat fare is only from JFK to Manhattan(source: http://www.nyc.gov/html/tlc/html/passenger/taxicab_rate.shtm...), not to JFK, or to/from LGA, and not to the other boroughs. UberX also comes to my apartment, while a taxi rarely does, and the drivers are typically more patient with me strapping my son's car seat in (or providing one in the case of Uber Family) and even helpful.

As someone who does not live in Manhattan, I can say that I'm far more likely to be able to get an Uber than a taxi outside of Manhattan (although it's a little better now with the Green cabs). And, I've never had an Uber driver keep their doors locked and speed away at rush hour when I told them I was going to Brooklyn. My utilization of taxis in NYC is entirely different than my utilization of UberX.

Re: The Economics of UberX in NYC

#14

Post by haddr »

maerF0x0 wrote: post #11
wdewind wrote: post #4

Earlier quoted context omitted.

And yet people still choose to drive for Uber. Are they all being taken advantage of?

And yet people work for walmart, are they all being taken advantage of? There is a claim that some positions of power make people unqualified to make choices. Think student/teacher or adult/minor sexual relations or maybe some of the ideas around accredited investors -- non-accredited investors are not allowed to invest in certain types of assets to protect them from predatory practices. I'm not commenting on moralit…

but then, is that the "disruption" we really want?

Re: The Economics of UberX in NYC

#15

Post by mattzito »

jhferris3 wrote: post #5

Not taking surge pricing into account probably plays a large role in explaining this article's findings. Another thing to note in his section with self driving cars: the pool of cars would be fixed in that case, but the amount of uber drivers fluctuates throughout the day. Now, uber doesn't really care if drivers are 70% utilized or 50% utilized, as their revenue doesn't depend on that, but they do have an interest i…

I think the distribution of ride lengths might partially have something to do with the nature of cab hails in NYC vs. other cities. I travel a lot, and in most cities, uber is my go-to cab service, because I don't know the local cab system, I might have to call multiple companies, I can't street hail in a lot of places, etc.

However, in NYC, it's often faster to street hail a yellow cab for short trips than it is to wait for an uber. So here, I mostly use uber for long trips (airports, midtown to the financial district, brooklyn, etc.) or for time-sensitive situations.

Re: The Economics of UberX in NYC

#16

Post by paulrosenzweig »

untog wrote: post #9

for the next three months at least, Uber is indemnifying full-time drivers against slow business. Good luck competing with that, companies-that-don’t-have-a-$1.5-billion-war-chest. This is what worries me. Uber are the freemarket dream child, but they're using their financial heft to actively distort the market. They've already driven Hailo out of the city, and I wonder who is next. I want Uber to become the de-facto…

I agree that this is concerning, but I think the risk is mitigated by the relatively low tie in. I personally don't care which app I use. So, I end up using whichever service will give me more VC-paid free credit.

Uber has the most VC by far. But, if they use that to kill competitors and subsequently try to raise prices, I'd happily switch to the next upstart that undercuts them.

The only big downside is that it necessarily requires a lot of VC to compete with them right now.

Re: The Economics of UberX in NYC

#17

Post by albertwang »

untog wrote: post #10
pbreit wrote: post #8

This guy's whole article falls apart based on one terrible assumption: that Uberx behaviors are similar to taxis. There are a whole host of reasons why this is not the case. Taxis are more likely to hang out in dense, Manhattan areas contributing to short and slow rides. Riders would much prefer to take an Uberx to the airport than a taxi. Surge pricing. Etc.

Why would people be more inclined to take an UberX to the airport than a taxi? The taxi has a flat fare. And from the map view I've seen using Uber, UberX's absolutely do hang around in dense Manhattan areas.

I live in Manhattan and I now prefer to take Uber/Lyft to the airport whenever there's no surge pricing. Taxis are _supposed_ to have flat pricing but I've never found that to be the case: given all the bridge/tunnel tolls, baggage fees, and airport taxes, I'm consistently charged anywhere from $80-$120 one-way from Midtown Manhattan to LGA (+tip). In comparison, Uber uses GPS tracking to automatically figure out which tolls to tack on, and it costs me $63.

Re: The Economics of UberX in NYC

#18

Post by [deleted] »

albertwang wrote: post #17
untog wrote: post #10

Earlier quoted context omitted.

Why would people be more inclined to take an UberX to the airport than a taxi? The taxi has a flat fare. And from the map view I've seen using Uber, UberX's absolutely do hang around in dense Manhattan areas.

I live in Manhattan and I now prefer to take Uber/Lyft to the airport whenever there's no surge pricing. Taxis are _supposed_ to have flat pricing but I've never found that to be the case: given all the bridge/tunnel tolls, baggage fees, and airport taxes, I'm consistently charged anywhere from $80-$120 one-way from Midtown Manhattan to LGA (+tip). In comparison, Uber uses GPS tracking to automatically figure out whi…

[deleted]

Re: The Economics of UberX in NYC

#19

Post by brownbat »

paulrosenzweig wrote: post #16
untog wrote: post #9

for the next three months at least, Uber is indemnifying full-time drivers against slow business. Good luck competing with that, companies-that-don’t-have-a-$1.5-billion-war-chest. This is what worries me. Uber are the freemarket dream child, but they're using their financial heft to actively distort the market. They've already driven Hailo out of the city, and I wonder who is next. I want Uber to become the de-facto…

I agree that this is concerning, but I think the risk is mitigated by the relatively low tie in. I personally don't care which app I use. So, I end up using whichever service will give me more VC-paid free credit. Uber has the most VC by far. But, if they use that to kill competitors and subsequently try to raise prices, I'd happily switch to the next upstart that undercuts them. The only big downside is that it nece…

> Uber has the most VC by far. But, if they use that to kill competitors and subsequently try to raise prices, I'd happily switch to the next upstart that undercuts them.

That's the rub of dumping. You basically have to do it indefinitely or you eventually get competition. The lucrative "jack up prices" phase is really hard to safely transition to. Barriers to entry, specifically long lead times, will make dumping more feasible for certain goods or services. It's not trivial to spin up a car service, but I'm not sure the barriers to entry are high enough or not.

There are other ways you can behave anti-competitively without dumping too...

Re: The Economics of UberX in NYC

#20

Post by morgante »

While fascinating, this analysis seems to fall apart on two major fronts.

1. It seems to completely discount surge pricing, which would likely change these numbers significantly.

2. It assumes that taxi and Uber behavior is very similar, but this seems pretty dubious for 2 major reasons:

a. In dense areas it's far more convenient to use a taxi than an Uber (you can hail one in a minute or two), while in less populated areas it's far more convenient to get an Uber. This would definitely skew Uber significantly towards longer, speedier trips.

b. Uber likely sees a greater proportion of utilization from airport rides. For an expensive trip like that, people are more price conscious and most New Yorkers know it's usually much cheaper to take Uber. When juxtaposed against the prospect of waiting in line for a ~$60 + tip taxi ride, the immediacy of a $63 Uber looks very appealing. Additionally, I imagine Uber is seeing disproportionate growth amongst tourists (who might already be using Uber elsewhere but are intimidated by hailing NYC taxis).

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