Thursday, September 24, 2015
Does Uber undestand the laws of Supply and Demand?
Many of us have been, flailing our arms around hoping that a cab will stop to pick us up. Maybe if I walk down one more avenue. Maybe if we cross the street. Catching a cab can be an exercise in futility. Even worse is the experience inside the cab as your driver attempts to get you from point A to point B while trying to cut off as many cars as possible. It is almost as if every driver is competing for "most aggressive cabbie" and they are all winning.
Wouldn't it be great if there was an alternative? A type of car service that you can arrange on your phone and you could rate the experience? Enter Uber. But some complain that Uber is Unnecessary. Others argue that their pricing system is unfair, or that it takes advantage of riders. Perhaps Uber simply understands the laws of Supply and Demand. Read the articles that follow and answer the questions.
http://www.economist.com/blogs/graphicdetail/2015/08/taxis-v-uber
http://www.economist.com/news/finance-and-economics/21599766-microeconomics-ubers-attempt-revolutionise-taxi-markets-pricing-surge
http://www.cnet.com/news/detest-ubers-surge-pricing-some-drivers-dont-like-it-either/
http://qz.com/505031/uber-got-two-economics-phds-to-explain-how-supply-and-demand-works/
https://www.washingtonpost.com/news/the-switch/wp/2015/05/19/no-uber-drivers-cant-game-the-surge-pricing-system-the-way-one-driver-claims/
Discussion Questions:
1) Explain Uber's "Surge Pricing." Is this form of Price Discrimination a good thing or a bad thing?
2) Do you think politicians should limit what Uber can charge? Explain one argument in favor of capping Uber fees.
3) How has the expansion of Uber impacted the Taxi market?
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