Story after story comes out critical of Uber. Reid sent me an article, that I saw mentioned on a blog about Uber’s CEO being indicted in South Korea because their UberX service is illegal.
But an indictment, as in South Korea, where Travis Kalanick faces up to $18,000 in fines is more or less meaningless. It’s posturing — such weak sauce that it amounts to implicit permission to continue operating. The move shows responsiveness to entrenched interests (taxis), that politicians are doing something, but that something is so light that the message to Uber is that there’s a near-zero cost to continuing to do business, travel on!
Peter Thiel called Uber “the most ethically challenged company in Silicon Valley.”
When Uber’s surge pricing kicked in in Sydney earlier this month as a drama unfolded with a gunman, they came under fire.
There are real criticisms of Uber. I believe they have a great business model, they’ve grown too quickly, and their corporate culture hasn’t kept pace with their growth. They were a brash upstart, fighting battles with regulators from their very start and at every turn, and that affected their DNA. As a company they need to grow up, and we’ll see if they can.
I like and use Uber, although I post the bad news and the criticisms, too. But the one criticism that rings most hollow is of their practice of surge pricing — raising prices when there’s significant demand that outstrips available vehicles.
Because surge pricing is great.
- It’s never a surprise. It pops up on a customer’s screen. You even have to type in the multiple to confirm it. You can’t be charged for surge pricing without acknowledging it first.
- Most of the money goes to the driver, not to Uber. Uber takes the same 20% cut during a surge that they do on regular rides.
- It balances requests for rides with available rides. People with a real need get rides, others are encouraged to take alternate forms of transportation or wait for the surge to end.
- It makes more rides available. It brings drivers into the surge area, when they might not be driving at all. Take a snow storm, at regular prices you stay warm at home, at surge prices you provide service if you’re a driver. That benefits drivers and gets riders where they’re going. And when drivers enter the area, the surge ends.
The degree of the surge depends on the imbalance between riders wanting rides and drivers available and willing to provide rides.
I’ve paid surge pricing — arrive at New York Penn Station. 4pm on a Friday. Raining. Shift change. You won’t get a cab on the street. The cab line was about an hour long. Uber, 1.25x pricing, a few extra bucks and I was on my way to my hotel in about 3 minutes. Bam.
THE ALTERNATIVE TO SURGE PRICING IS NOT ENOUGH RIDES AT ANY PRICE. The alternative ‘surge’ pricing is infinite. Uber adds capacity, provides a service that wouldn’t otherwise exist.
Reader N.G. passes along a piece explaining what surge pricing does, with data.
Uber’s Boston team first tinkered with a price hike on weekend nights around 1 a.m., when drivers tended to clock out just as the city’s public transit system approached closing time, a situation that created lots of demand for Uber cars.
In just two weeks they had a resounding answer,” Gurley writes. “By offering more money to drivers, they were able to increase on-the-road supply of drivers by 70-80%, and more importantly eliminate two-thirds of the unfulfilled requests.”
Economists love surge pricing, people who don’t understand economics hate it.
- You can join the 40,000+ people who see these deals and analysis every day — sign up to receive posts by email (just one e-mail per day) or subscribe to the RSS feed. It’s free. You can also follow me on Twitter for the latest deals. Don’t miss out!
@Gary — I agree 100% and it bothers me that people would rather have no cars than cars at a higher cost for those who are willing to pay for them.
I was recently caught in the middle of a cold spell in Manhattan with no cabs anywhere to be seen and the subway “down” due to an electrical problem. I fired up Uber and surge pricing was in effect. At first I was miffed, but there was no choice and I was going to be late to an important meeting. In the end I took it and considering the alternative I was happy.
Uber’s reach has exceeded its grasp. It now charges $90 for a (non surge) ride from Arlington to iAd. One can arrange a proper limo for less than that.
They are pricing themselves out of their own market.
It seems they are pulling a bait & switch at the time one may need them the most. Yeah, that’s great!
Gary has plenty money unlike regular folks. So all he cares about is getting a taxi at any cost. Screw the poor and middle class people.
@tk: Uber is not public transportation. If you want to help the poor and middle class, then you need to fight for better public transportation (which is in bad state in this country).
I don’t mind surge pricing, but it should be limited. Maybe never more than 2x the price. Some of the stories I’ve heard were horrendous.
Also, if you want to go to the airport and can plan in advance, car services (arranged in advance) are probably a better option. And they increase the price too at certain times, but not that much.
It’s kind of insulting to be told that since I “hate” surge pricing, then I simply “don’t understand economics.” I guess I’m just not as sophisticated and refined as others may be in this regard.
I see Uber as a car service, and not a commodity like orange juice, gold, beef, oil, lumber, or natural gas. While the prices of such may fluctuate, they are for the most part gradual until proper balance has been achieved.
This is different from sudden surge pricing of a car service. It’s like my plumber’s rate going up $100 because he suddenly got too many calls.
I’ve been weighing the pros and cons of Uber service. This blog and a few others seems to promote Uber at any cost – as if they had a stake in the game.
Now, surge pricing – after one has come to know and trust Uber – we are told is simply “great.” And if one hates it then – you’re probably just too stupid to understand the economics that are involved.
This blog post just make up my mind about this service. Uber is OUT. DONE. OVER. Final answer? Yes, final answer. They have lost this customer forever. Put me down in the dunce column, and send me to remedial economics class.
Well, except when they purposefully manipulate it…
http://www.theverge.com/2014/2/26/5445210/in-san-diego-uber-kept-drivers-off-the-road-to-encourage-surge
@kokonutz that’s the Uber black car price, which is no more than car services generally charge to Dulles. UberX is a flat $55. It’s not more expensive than a cab. And Dulles needs to be ensured a price like that because it’s illegal for a driver to pick up a return ride there.
I disagree Nick! It is not bait and switch. You know EXACTLY that there is SURGE pricing WHEN you request it. If you do not want to pay surge pricing, don’t accept it.
I have seen 50%, 75%, 100% and 125% SURGE pricing. BUT I have waited a few minutes and refresh. I may have gone down, gone up – or SURGE price ended. Its a gamble. But in Los Angeles where there are rude riders who do not speak English and who many times have dirty cars, I love it.
There are some good arguments to be made for a more-perfect instant market in cab services (that is, Uber’s surge pricing) and Gary makes those good arguments here. Plenty of industries, including some public transportation services, use on/off peak pricing and Uber just further rationalizes that kind of pricing by making it dependent on _actual_ demand rather than using time-of-day as a proxy for demand.
Yet those who advocate perfect-marketism and dynamic pricing never seem to recognize that it’s an approach that has limitations. The legal concept of price gouging exists not because of a small group of perfidious Marxists but because society as a whole recognizes that there are cases in which the market ought not to be allowed free rein. Access to basic services in the case of natural disasters are one — food is not meant to be allocated solely on the basis wealth in the aftermath of a Tsunami, for instance. I’d argue that Uber’s (or their computers) attempt to treat as a profit center people fleeing a terrorist incident is another (and I guess they agree).
Therefore, I think society will accept surge pricing within reasonable limits. Limits might include maximum pricing and specification of conditions that would trigger a relaxation of surge pricing.
@Jay that’s a pretty unfair read of what Uber was doing — they were expecting a surge, and wanted to encourage all of the drivers in their system to get on the road in order to provide rides
New Yorkers have been doing just fine before uber, boro taxis, citibike and even credit card acceptance in cabs. If you don’t like it, don’t use it. There are other ways to get around, even in the — gasp — rain. Negotiate a black cab, hop on the subway or something.
I agree uber needs to grow up ethically but you can hardly call surge pricing bait and switch. It’s only the entitled, overgrown children who have flooded New York who drunkenly accept preposterous surge pricing and then throw a hissy fit the next day.
nicksterguy: “My sink is backed up, so please come over here and snake the drain.”
Plumber: “OK but – I got too many calls right now, so it will be an extra $100.00 over what we normally charge to do that…”
nicksterguy: “That’s great! My appreciation and understanding of the economics makes me just LOVE the new rates! Yes! Please come!”
@Nick
* Do you want your drain unclogged now? Or would you rather wait for the surge to end and get a better price? It’s up to you!
* But the difference between your scenario and Uber’s is that in your story, surge pricing won’t bring more plumbers into the market in the immediate term to satisfy the unmet demand. With Uber, surge pricing gets rides to people who need them when they want them. And as soon as enough drivers come online, the surge ends.
@Gary
For now…I will clear the drain myself.
Those who lovingly and willingly give this “surge” the thumbs up may begin to see more and more “surge” pricing, and at more frequent intervals – only time will tell.
I still say it’s a form of bait & switch. Those who don’t love my theory simply don’t understand sales tactics and the marketing that’s involved.
@Nick by clearing the drain yourself you’re doing your part, responding to the incentives, exactly what the surge is designed for!
Airlines charge less when demand is lower, and more when demand is higher too. Surge pricing isn’t new. What’s unique about Uber is that their system works in real-time to bring more capacity into the market right away to satisfy customers and end the surge!
Uber is very upfront about how surge pricing works, when it applies, and why.
For whatever reason, people find it very difficult to separate the concept of a price from the underlying scarcity, and thus fundamentally misunderstand the *role of prices* in a market.
People seem to misunderstand that the underlying scarcity exists regardless of what the price is. Surge pricing at least *attempts* to reflect the underlying scarcity, and more importantly, align incentives in a way that should help *improve* the scarcity problem.
It’s like going into a room that’s too warm, removing some mercury from the thermometer, and patting yourself on the back that you’ve made the room cooler. That’s basically the level of reasoning people put forth when they resist prices that reflect scarcity, just as the natural mercury level reflects the underlying temperature. Don’t shoot the messenger.
What’s going to get more interesting and controversial is when Uber starts using information about every individual member to determine their likelihood of accepting a surge price. They will price discriminate surges onto those more likely to pay them. You can argue this hasn’t been announced yet, but it is certainly coming.
Uber will start with your (ie. an individual’s) ride history, but then branch out and pull 3rd party data and situational data to build a rich profile of whether and under what circumstances [eg time of day, weather] you’re going to accept Uber’s price gouging [sorry, ‘efficient pricing’] regardless of if there’s a real surge.
And the “efficient market” people will cheer, largely because they would otherwise have to eat crow and admit they were wrong about Uber being a better solution.
Reading these comments is simply astounding. Seriously, many of you are reacting to Uber’s surge pricing based on some weird “why can’t I get all the candy!?” mentality.
The economics of surge pricing is clearly outlined by Gary above, and given how Uber does the pricing, via algorithm, there is a very simple correlation between whatever the surge price is, the demand, and the supply. IT”S MATH, PEOPLE! Your knee jerk reactions and whining about how unfair it is will not now nor EVER change the simply mathematics involved.
If the whiners about Uber have their way, and limit surge pricing, the result is exactly what Gary stated above: there will be NO cars available at any price just when you are wet, cold, miserable, late, and desperately wish you could have a car. But you can’t have one because you whined too loudly and too much.
Once Uber is abolished we should go ahead and forbid the airlines from selling those pricy Friday afternoon flights, the gas stations near airport rental car centers from charging more than “regular” stations, and by all means, stop 7-11 from selling groceries for a higher cost than they sell for at Costco. It’s just not fair. Chavez figured out a solution to these evil practices of the free market and it’s working wonderfully down there.
The reason why cabs are regulated (one of them) is to allow for fair, expected pricing, and equal availability for all. Uber removes the ability for those to get cabs unless they have a smartphone, and now charges more if there isnt enough supply. This is great if you want to make a market for the well-to-do, but if you want your school teacher or waiter to be able to get to work/home, this sucks. When less people are willing to help the everyday person, it makes life harder and more expensive for everyone. This is nothing more than trickle-down-economics, which has been proven not to work.
@Gary: Uber is not in the least up front about how surge pricing works and when it will apply. They are only clear about whether it is in effect at any given moment.
Uber’s algorithm is proprietary. Nor is it obvious what their algorithms are designed to solve for. It’s pretty clear that Uber’s interest is only coincidentally congruent with providing the most rides at the lowest price. Their interest is in maximizing profit and therefore they have a substantial interest in never bringing on the “next driver” who would cause pricing to drop.
You argue that Uber’s surge pricing is intended only to provide more rides and is only triggered by genuine scarcity. I argue that Uber’s surge pricing is intended primarily to produce higher revenues and is possibly triggered by any number of factors which may well include their own internal revenue targets.
So many of Uber’s claims of what drivers make per hour has been baseless. Is there any proof that suddenly people are out renting cars to use to pick up Uber fares when surge pricing hits? I simply don’t buy that surge pricing brings more drivers on the road. If everything in life were market driven there would be no roads to drive the Uber cars on. I don’t mind paying a premium for the service but I think that surge pricing goes too far and doesn’t bring an advantage into the market.
Uber CEO indicted in Korea. He should be arrested and pinned to the wall, a neo-Naxi socialist leftie. As much as everyone “likes” Uber, it is a zero money maker funded by two financial institutions and now communist Baidooooo.
Anyone claiming “I couldn’t find a taxi” in Manhattan is obviously an Uber mark. Oh yeah, I couldn’t find a taxi in Tokyo, Bangkok, and Hong Kong, either. ^_^;
Is Uber nice to have? Sure it is. Its great to think that you are important and rich enough to have a private driver available to you at any cost. But don’t go lieing to yourself and others that its great for the WORLD that you have this. You are exploiting a market. Pretty soon, that market will swing back, and exploit you.
@ED recent public statements notwithstanding, the usual criticism of Kalanick is that he’s right wing, and a big fan of ayn rand!
If it is all about balancing supply & demand, and incentivizing more drivers to drive during that imbalance, then Uber can easily avoid all controversy by capping their own take to the 20% of normal rate rather than the surge rate. i.e. If a 1x priced ride was $100, Uber would take 20%, $20. At 1.5x surge, the same ride costs $150, let Uber still take only $20, rest goes to the driver. In fact, it seems more than fair this way because Uber is better incentivizing the driver which they claim as the whole point of surge pricing anyway, right?
If Uber is to take $30, what extra benefit is Uber bringing to the table for that additional $10? What is Uber’s reasoning for taking 20% of sur
(Clicked post too quickly)
To complete my last sentence…
What is Uber’s reasoning for taking 20% of surge price instead of 20% of normal price?
I agree with many about the advantage of surge pricing to balance out supply and demand. A more pertinent question should be why does Uber’s revenue share stay the same on the surge pricing? Since Uber bills itself as a transportation intermediary, there is no added cost when supply and demand is out of balance. This is where Uber shoots itself in the foot by trying to score additional revenue while people are paying more. (Imagine if airlines increased their baggage fees during Christmas.) Instead, Uber should pass the surge price directly on to drivers, which would lower the cost required to get additional drivers on the road and remove the incentive for Uber to overly apply surge pricing to increase it’s own revenue.
I understand surge pricing and Gary is pretty condescending about the whole thing (and yes, he writes like he has equity although I probably believe him when he says no). My main concerns are two-fold: first, Uber should follow the same driver regulation and insurance rules everyone else does. Unlike medallions those actually exist for rider benefit and not to hinder competition. For example in California law enforcement and cab licensing are linked – it’s not some sham third-party “background check database” they look at once, it operates in real-time. Second, I strongly believe cab rides are actually more like electricity or public transit than an airplane ride. If your electric company could quadruple your charges when a natural disaster or heat wave made power consumptions greater they would and economists would say “sure makes total sense to balance supply and demand.” But they aren’t allowed to because it’s regulated (and ask California how well deregulation of electricity works – it’s not been airlines, it’s been GS manipulating the market, a governor recalled, ands back to much stronger regulation). So what I believe is going to happen is that Uber’s 100% superior service will win out, cab service as currently exists will go away, Uber prices will go up at an amazing rate, and an entire class of people will be disenfranchised and unable to access what is actually a public service necessity.
Obviously the service is good, but failing to play by the rules for safety is an FU move and the end-game is much higher prices and service only for the monied. Given the typical discussion here is of finest lounges and hand-stitched suits I assume most here care/think about the ~10%. But that doesn’t mean arguments about the other 90% are wrong because “supply and demand” says they are wrong. Oh, also Lyft – still in business, less FU, proving it is possible.
Gary: as you admit, you are not responding to the many, many, many criticisms of Uber’s culture and conduct that are not directly related to it’s business model. I’m glad you think those things are worth thinking about.
But neither does your glib, condescending post deal with the the serious economics arguments about price gouging (and the kind of society we want to live in), which you might like to spend some time thinking about, e.g. http://www.demos.org/blog/12/17/14/ubers-surge-pricing
@Mike as I begin the piece, there have been a number of issues with Uber conduct and people who know more about its culture have both defended and criticized it.
This post, though, looks only at surge pricing. The link you provide though doesn’t appear to offer any “serious economic arguments” it simply responds to what it contends is a poorly-constructed defense of Uber. That’s not interesting.
What’s the argument you’d like to make, feel free to make it here in the comments, then we can have a discussion. I’ve yet to hear a serious economic argument against surge pricing — if you can find an economist that makes an argument against surge pricing, it will be along the lines that IN SPITE OF the economics, they don’t like it (“what kind of society we want to live in”).
I want to live in a society that manages to direct resources to their highest valued use, that doesn’t say no service at all is better than service at a high price, that manages to satisfy the needs of the greatest number and expand the supply of transportation when it’s needed most. That’s exactly what surge pricing does.
@bode writes “he writes like he has equity although I probably believe him when he says no”
Hah. Uber isn’t even publicly traded. I don’t believe I even know anyone (1) with equity or even (2) that works for Uber, other than in an independent contractor relationship as a driver [folks that have driven me, and one boardingarea blogger].
@Mike this is a great piece. This is the best, most succinct way I have seen this put. This is the argument I believe many people are making against Uber, both surge pricing, and in general:
This is the most problematic part of surge pricing that always goes unnoticed. In an equal society, jacking prices when demand outstrips supply causes those who need/want the rides the most to get them. In an unequal society, jacking prices when demand outstrips supply causes those who have the most money to get the ride. Despite the taunts of irrationality you read from journalists, it is actually totally “rational” for someone on the bottom end of an unequal economic distribution to prefer keeping the prices low, thereby allocating the rides by lottery, rather than allowing them to be jacked up, thereby allocating the rides by wealth.
@Larry
“I argue that Uber’s surge pricing is intended primarily to produce higher revenues and is possibly triggered by any number of factors which may well include their own internal revenue targets.”
Exactly! It may not be the same Uber. Only time will tell.
@Gary
“This post, though, looks only at surge pricing.”
No, it doesn’t. And I think you owe some of your readers an apology. Your post makes quite a few assumptions on the part of UBER, assumptions that quite franky – I don’t know how you can state as true (unless you just believe everything you hear).
It also makes assumptions with regard to people who read the blog. Being told “if you don’t like it, you obviously don’t understand it…” is not only a crass misrepresentation of facts, but I daresay underhanded and low. I have the right to dislike Uber’s surge pricing, be skeptical about when and why they do it, and still understand basic economics. I’m surprised at you – you seem like a better guy than what is displayed in your post.
Gary, Is this a rehash of someone else’s article. Google searches bring me to almost the identical wording.
I just want to ask you… have you been drinking the Uber kool-aide. How can your one sided support for their surge pricing ignore the price gouging. Are the 7.1 x and 8.25 x surge pricing a policy you defend? A &50 ride that can cost over $400 is reasonable, as is a double or trippple fare (50->150) on a weekend night?….. Sorry, but this policy stinks. They could just as easily cap it at 50% or 125% surge pricing. But, to charge 825% over normal is just bordering on criminal. To think that you support this makes me wonder where your loyalty lies.
@Nick how can you suggest that I’m taking a broader tact beyond surge pricing when I flag myriad complaints about uber from the outset? You say I’m making claims or accepting assumptions about Uber without saying what assumptions those are… (with regard to your last point, conclusions are different from assumptions.)
@Sean You make a VERY serious charge which is 100% false. This is 100% my original writing, except where I am quoting others. Although I do not claim all ideas are my own originally, I’ve certainly been influenced by conversations with others!
@Gary
Not a very good apology. And I think I was clear. You just don’t understand it, or care to. I’m very dissapointed in you, Gary Leff.
Of course it can be individually rational to oppose surge pricing, even if you know a thing or two about economics. @Joelfreak gets at this. Let’s say the Uber ride you’d like to take usually costs $20, and $20 is all you can spend. With surge pricing in effect, the probability of you being able to catch a ride is zero. Without surge pricing, the probability may be low if demand is high, but still greater than zero. A budget constraint makes all the difference. So opposition to surge pricing can be individually rational; social optimality depends e.g. on what’s your welfare benchmark. But Gary’s absolutist position here lacks imagination. And it’s offensive (and unconvincing) to dismiss people you disagree with as too dumb to understand economics.
So, Gary, would there be *any* item for sale which someone could not surge price?
I don’t take issue with the surge pricing but I did find it strange that it was appeared to be in effect 100% of the time during my recent visit to NYC – a period that covered weekday and weekend days, nights, late nights, et). As such it meant that we took taxis (which were very easy to find, even during peak evening times) which were 50% less than UberX except to JFK where the pricing was normal. Personally I would prefer UberX but it might be more honest for Uber to price everything 2x higher in Manhattan and offer occasional discounts, rather than pretend to “surge” price 20 hours a day.
I have no problem with surge pricing within limits. 2x? Fine. 30x? Gouging and don’t be surprised if you will eventually be regulated.
Fuck Uber… 3.5x surge at 8am in NYC…$125.00 for a ride that would be $30 with a yellow cab.
The only thing eliminating surge pricing would do is eliminate availability at peak times.
That said, they make the pricing very clear before you order a car. To Nick above, how in the world you see this as bait and switch is beyond me. The “please acknowledge this will be the pricing” question seems pretty clear.
To kokonutz…where did you read uber was the low cost provider? If you are simply picking your car based on the lowest price, then you should probably look elsewhere. (It is this type of consumer behavior…price over all else…that has driven domestic carriers’ economy cabin products into the toilet.)
For those who don’t like their surge pricing or even regular pricing…if you haven’t found the way to delete the app from your phone, I’d be glad to help. Frees up capacity for those who can best use the product.
“Economists love surge pricing, people who don’t understand economics hate it.”
This is truly ironic and unbelievably condescending, Gary, since in order to offer such a one-sided justification for Uber’s surge pricing and making such a bold statement on people’s understanding of economics, you’d have to actually know what you’re talking about and possess a firmer grasp on economics than what you display here. It’s also pretty cowardly, a cheap shot if you will, considering you do have months’ worth of thinkpieces citing economists near universal support for the concept of surge pricing, and probably where you got most of the material for this post. But I’d be willing to bet even those economists would be more nuanced in their appreciation of the interplay between economics and public policy.
I’ll just quote some passages on a couple pieces for the benefit of your readers and to demonstrate, to you, that you don’t deserve to be on the intellectual pedestal you seem to have put yourself on. From a book by Michael J. Sandel:
“How do defenders of price gouging laws respond? First, they argue that the welfare of society as whole is not really served by the exorbitant prices charged in hard times. Even if high prices call forth a greater supply of goods, this benefit has to be weighed against the burden such prices impose on those least able to afford them. For the affluent, paying inflated prices for a gallon of gas or a motel room in a storm may be an annoyance; but for those of modest means, such prices pose a genuine hardship, one that might lead them to stay in harm’s way rather than flee to safety. Proponents of price-gouging laws argue that any estimate of the general welfare must include the pain and suffering of those who may be priced out of basic necessities during an emergency.
Second, defenders of price-gouging laws maintain that, under certain conditions, the free market is not truly free. As Crist points out, “buyers under duress have no freedom. Their purchases of necessities like safe lodging are forced.” If you’re fleeing a hurricane with your family, the exorbitant price you pay for gas or shelter is not really a voluntary exchange. It’s something closer to extortion. So to decide whether price-gouging laws are justified, we need to assess these competing accounts of welfare and of freedom.
But we also need to consider one further argument. Much public support for price-gouging laws comes from something more visceral than welfare or freedom. People are outraged at “vultures” who prey on the desperation of others and want them punished — not rewarded with windfall profits. Such sentiments are often dismissed as atavistic emotions that should not interfere with public policy or law. As Jacoby writes, “demonizing vendors won’t speed Florida’s recovery.”
But the outrage at price-gougers is more than mindless anger. It gestures at a moral argument worth taking seriously. Outrage is the special kind of anger you feel when you believe that people are getting things they don’t deserve. Outrage of this kind is anger at injustice.”
Greed is a vice, a bad way of being, especially when it makes people oblivious to the suffering of others. More than a personal vice, it is at odds with civic virtue. In times of trouble, a good society pulls together. Rather than press for maximum advantage, people look out for one another. A society in which people exploit their neighbors for financial gain in times of crisis is not a good society. Excessive greed is therefore a vice that a good society should discourage if it can. Price-gouging laws cannot banish greed, but they can at least restrain its most brazen expression, and signal society’s disapproval of it. By punishing greedy behavior rather than rewarding it, society affirms the civic virtue of shared sacrifice for the common good.”
(link: http://www.nytimes.com/2009/11/29/books/excerpt-justice.html?pagewanted=all)
TLDR: Don’t worry folks, you can still hate price surging and understand economics.
@Billy thats not the issue, its when companies who abuse the system like Uber push out real cabs. If Uber had to buy medallions, insure their cars and do real background checks (not like what they now have basically said they are doing) their costs would be much higher. Instead, they tried to crowdfund this model with all OUR money, where we basically pay to make the other options disappear. As I have said before, I LIKE Uber (when it works), but I want to see more rules on the company, and I want to see them play by the same rules everyone else needs to.
If you don’t like extremely high surge pricing, and don’t mind waiting longer to get a ride, use Lyft. It caps its version of surge pricing, known as “Primetime,” at 200 percent of the standard fare (which is comparable to UberX). Assuming consumers dislike surge pricing enough to offset its benefits, either Uber will respond by making its surges more predictable and modest, or Lyft will outgrow Uber.
I don’t understand all this fuzz about price surge. If you don’t like it, don’t pay for it, period. Speak with your actions. If most people think and act that way, the Uber model will fail and the market would have spoken. Uber brings to the table an alternative that did not exist before. Is not welfare – leave that to the government. Just stick to your regular cab or public transportation instead of whining about a new business model that others may want badly enough (or not).
@Billy; I do not seek low cost. I seek maximum value. Über used to provide that in terms of quality, convenience and price.
Lately though quality in terms of cars and drivers has fallen while prices have risen.
So I have done what any rational market actor would do: stopped using uber and gone to a proper limo service. The cars are nicer, drivers more professional AND the cost lower. And that’s without taking potential surge pricing into account.
And yes, Gary, I am talking about black car. And No limo service makes excuses about the IAD pick up policy when quoting a rate as you do for uber. Nor should they or you.
While you make a nice free market argument from the #business# perspective, from the #consumers# prospective a free market is about value. And über only rarely delivers that anymore.