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Uber has defeated Bill de Blasio’s plan to rein them in

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Re: Uber has defeated Bill de Blasio’s plan to rein them in

#81

Post by dylanjermiah »

danieltillett wrote: post #65

The thing about Uber I don’t understand is how they are going to defend their monopoly once they acquire it. Assuming they eventually win all the legal battles and drive all other taxi and taxi-like services out of business then how are they going to stop anyone else from entering their market? Each transport market is effectively isolated (you don’t hail a driver from SF to get around NYC). This means any new entran…

It is rare to see, of not impossible, a real monopoly in a free market. Uber has to compete to win customers, if they artificially raise their prices to where people will not pay, people will choose a different form of transportation.

Re: Uber has defeated Bill de Blasio’s plan to rein them in

#83

Post by vasilipupkin »

There is a restaurant in Chicago called El Ideas http://www.eater.com/2015/4/27/8486425/phillip-foss-el-ideas...

It's in a neighborhood that has no cabs and driving there not pleasant or convenient. Last night the chef told me if it wasn't for Uber, they probably wouldn't have survived

Re: Uber has defeated Bill de Blasio’s plan to rein them in

#84

Post by dylanjermiah »

littletimmy wrote: post #20

Pity. This modern day exploitation should end. Uber's huge profits are because they exploit people for labor. Ban it already.

What profits? Uber is losing money every day aiming to provide a quality service for people. They lost tens of millions on last years numbers. Will most likely do the same this year as well.

Re: Uber has defeated Bill de Blasio’s plan to rein them in

#85

Post by danieltillett »

noir_lord wrote: post #74
danieltillett wrote: post #65

The thing about Uber I don’t understand is how they are going to defend their monopoly once they acquire it. Assuming they eventually win all the legal battles and drive all other taxi and taxi-like services out of business then how are they going to stop anyone else from entering their market? Each transport market is effectively isolated (you don’t hail a driver from SF to get around NYC). This means any new entran…

I think (not an economist) but this is what happens when a market is disrupted, new players enter with a lower cost than incumbents, clean up, this encourages other new players to enter at slightly below, first player then drops to match and eventually you reach a new stable equilibrium, in lots of markets that is by one company winning and buying out the others (commodities like Sugar and Salt seem to go this way, i…

Industries like sugar and salt are commodity industries where prices are driven by costs. There are economies of scale that allow one player to dominate a market and prevent new entrants. Uber does not have this advantage since each market is effectively small and isolated (there are thousands of taxi markets in the USA alone) and most of the costs are unit costs, not fixed costs over which they can scale.

Any competitor with lower costs - say a business that used only one fuel-efficient car type that offered lower unit costs should be able to outcompete Uber. The contractor model where each contractor purchases and services the needed physical equipment (i.e. cars) is far from the most efficient way to run a capital intensive business.

Re: Uber has defeated Bill de Blasio’s plan to rein them in

#86

Post by danieltillett »

onewaystreet wrote: post #79
danieltillett wrote: post #65

The thing about Uber I don’t understand is how they are going to defend their monopoly once they acquire it. Assuming they eventually win all the legal battles and drive all other taxi and taxi-like services out of business then how are they going to stop anyone else from entering their market? Each transport market is effectively isolated (you don’t hail a driver from SF to get around NYC). This means any new entran…

https://en.wikipedia.org/wiki/Loss_leader They use their revenues and funding to subsidize lower prices in key cities than their competition can afford. They already do this in a few cities.

Sure, but their investors are going to want them to start extracting profits at some point in the future. You can’t run an business indefinitely selling below your costs. The question I have is how are they going to be able to start doing this without opening themselves up to competition?

Re: Uber has defeated Bill de Blasio’s plan to rein them in

#87

Post by michaelochurch »

I'm no fan of Uber and I can't stand its founder or his ridiculous smirk but... they played this well. Uber's got game when it comes to politics. If either political party ever learned demagoguery from Travis, I'd be scared.

It helps them that their opponent isn't sympathetic at all. Non-zero medallion values, by definition, mean that there are too few cabs on the road (and in New York, there are). The Medallion Mafia pisses me off; just a bunch of rent-seekers stealing money from drivers.

I'm actually glad to see the Medallion assholes get "disrupted". I just wish that it were a different company taking the lead in doing it.

Re: Uber has defeated Bill de Blasio’s plan to rein them in

#88

Post by danieltillett »

dotBen wrote: post #80
danieltillett wrote: post #77

Earlier quoted context omitted.

I also don’t think it is very likely either, I was just assuming the best case scenario for Uber and I can’t see how they can make money in the long term even if they achieve this. Competition is great for consumers, but not so good for investors. Edit. Thanks for the updates to your post Ben. Given Uber’s cost of capital and current valuation how do you see Uber earning enough of a return with a differentiation busi…

I think you under-estimate the power of network effects and also the cost of entry to set up an on-demand transportation company. If it really was as easy and low cost as you assert I would suggest you would have seen many other players enter the market already by now.

Maybe, but if each market is isolated then the network effect is small. To dominate a market you just need enough drivers available to meet the market expectations. If you have two businesses in a market supplying an equal quality service, but where one is 20% cheaper, then the cheaper service will capture the majority of the market.

An alternative hypothesis might be that nobody can think of a way to make money by investing in such a market and so they don’t.

Re: Uber has defeated Bill de Blasio’s plan to rein them in

#89

Post by danieltillett »

dylanjermiah wrote: post #81
danieltillett wrote: post #65

The thing about Uber I don’t understand is how they are going to defend their monopoly once they acquire it. Assuming they eventually win all the legal battles and drive all other taxi and taxi-like services out of business then how are they going to stop anyone else from entering their market? Each transport market is effectively isolated (you don’t hail a driver from SF to get around NYC). This means any new entran…

It is rare to see, of not impossible, a real monopoly in a free market. Uber has to compete to win customers, if they artificially raise their prices to where people will not pay, people will choose a different form of transportation.

Yes this is the problem. Unless investors don’t care about returns how will Uber extract the profits required to justify their current valuation?

Re: Uber has defeated Bill de Blasio’s plan to rein them in

#90

Post by pbreit »

danieltillett wrote: post #65

The thing about Uber I don’t understand is how they are going to defend their monopoly once they acquire it. Assuming they eventually win all the legal battles and drive all other taxi and taxi-like services out of business then how are they going to stop anyone else from entering their market? Each transport market is effectively isolated (you don’t hail a driver from SF to get around NYC). This means any new entran…

It's pretty much a natural monopoly and very difficult to compete against once in place.
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