31–40 of 60 posts
Charging more for trips based on supply and demand makes sense. Why wouldn't you charge more for passengers who are willing to pay more? But it seems completely ridiculous for Uber to treat that money differently and take 100% of it.
Earlier quoted context omitted.
Not really, competition only checks this effect if the price-discrimination advantage isn't so compelling such that: 1) All firms start doing it...because what Producer wants to leave money on the table? 2) The firm that does it best gains a significant advantage over competitors thus leading towards non-competitive market conditions. And, from a purely speculative perspective, if the price discrimination advantage w…
> 1) All firms start doing it...because what Producer wants to leave money on the table? That seems to just skirt around the issue. The basic (Econ 101) point of competition is that if all existing firms are making 100 units of profit, and a new firm can make 50 units of profit by offering an equivalent product at a lower price, then that new firm will take business from the existing firms.
In the short run, my willingness to pay Uber is roughly "whatever Lyft is charging for the same route."
In the long run, if Uber and Lyft somehow collude to increase prices a lot, I buy another car and use both services much less. My short-run behavior won't tell them where this threshold lies, and once it has happened it is too late for them to get my business back for a few years.
Price discrimination works if you have real market power, or if marginal and average costs are hugely different (see: airlines, software). Uber's business doesn't seem to resemble either situation.
Earlier quoted context omitted.
Let me try to demystify what we're talking about, and show competition works fine even in this scenario. Let's say a ride is worth $20 for the consumer and $12 for the producer, for a total surplus of $8. If the price they agree on is $14, the consumer surplus is $6 and the producer surplus is $2. If the producer can be sure the consumer values the ride at $20, they can charge $19 and take home most of the surplus. N…
The only mystifying part is your abstract analogy that never seems to happen in reality
Earlier quoted context omitted.
Let me try to demystify what we're talking about, and show competition works fine even in this scenario. Let's say a ride is worth $20 for the consumer and $12 for the producer, for a total surplus of $8. If the price they agree on is $14, the consumer surplus is $6 and the producer surplus is $2. If the producer can be sure the consumer values the ride at $20, they can charge $19 and take home most of the surplus. N…
The only mystifying part is your abstract analogy that never seems to happen in reality
Competition doesn't always work. It isn't magic. It may even need assistance. But to say it never happens is just... not.
Once a friend of mine had famously quipped: Pick one profession and any country in world - rules of that business kind of remain same. Uber is a taxi company and they are acting like one. Should not be the way forward for Uber-like (read other 'push a button') services should be decentralized / p2p (sure i've watched Silicon Valley this week) in a way such that service provider and payer are not screwed like this. (N…
I have trouble seeing how this is supposed to work. In the short run, my willingness to pay Uber is roughly "whatever Lyft is charging for the same route." In the long run, if Uber and Lyft somehow collude to increase prices a lot, I buy another car and use both services much less. My short-run behavior won't tell them where this threshold lies, and once it has happened it is too late for them to get my business back…
As for the ethics of Uber, it is like the $1 billion in my bank account. It doesn't exist :)
Once a friend of mine had famously quipped: Pick one profession and any country in world - rules of that business kind of remain same. Uber is a taxi company and they are acting like one. Should not be the way forward for Uber-like (read other 'push a button') services should be decentralized / p2p (sure i've watched Silicon Valley this week) in a way such that service provider and payer are not screwed like this. (N…
That would be beneficial for drivers, and riders, but not very beneficial for investors.
> “Society is more willing to accept wealthy people paying higher fares,” said Chris Knittel, a business professor at the Massachusetts Institute of Technology. “But if the repercussion of lower fares in lower-income places is longer wait times, that’s probably what they want to keep an eye on." I can't help but recall all the times Uber or its defenders claimed that its supposedly uniform fare scale meant that it co…
Interesting, I hadn't heard that defense before. It seems like Uber's app-based hailing is the reason why poor neighborhoods are able to get serviced. Previously, no taxi driver would drive around in those areas - because of opportunity cost of higher fares in richer areas, and fears of getting robbed when there was tons of cash in the car.
Well, if Uber is using dynamic pricing to ensure fares from richer areas are more expensive than those from poorer ones won't that have the exact same effect?
Its funny. When I first started using Uber, every time I took a ride and paid the fair its was almost a joyous experience to pay what seemed like so little. It made me want to use Uber for all sorts of trips and tell everyone else to do the same. Now every time I open it, it feels like just a liiittle too much to use for anything but a very occasional trip. They get more from me for each trip I now almost never take.…
Since it's not reliable I prefer it much less. I'd rather it just cost $16 both times.