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?
39 comments:
Dan C - Eco 5th pd
1) Explain Uber's "Surge Pricing." Is this form of Price Discrimination a good thing or a bad thing?
Uber's price surge strategy is not a bad thing. There is no law that companies can not charge more money for a good or service at a certain time. For example on Feb 13th valentine's candy is crazy expensive but the 15th its probably half as much. Uber is doing the same thing by charging more during busy times and should not be penalized for doing so. It also promotes competition among yellow cabs and other alternative car services. Companies like yellow cab will have to improve their product to compete with uber and the consumer will benefit.
2) Do you think politicians should limit what Uber can charge? Explain one argument in favor of capping Uber fees.
I dont think politicians should be involved in the pricing of Uber cars. It is up to the company to price their product and the government should not be involved. One argument that politicans give that shows the other side of the arguement is that surge pricing takes advantage of people during emergencies. During times of emergency like Hurricane Sandy or the Sydney Hostage crysis, costumers were charged hundreds and had little control over it because of their situation.
3) How has the expansion of Uber impacted the Taxi market?
It has put the taxi business in a bad spot.For example, "The average price of one of the city’s 13,771 medallions (licenses to drive taxis) has fallen from an average of $1m during the summer of 2014 to $690,000 over the past three months, an aggregate loss of some $4 billion of value." This shows hoew taxis need to get their act together and provide a better serice to compete with companies like uber.
Eric
1) Explain Uber's "Surge Pricing." Is this form of Price Discrimination a good thing or a bad thing?
Uber’s “Surge Pricing” refers to fact that Uber changes it base rate based on the time of day and season of year. This means that those traveling during peak times of year, holidays, will pay more than off peak times, for traveling the same distance. This form of price discrimination is both a good thing and a bad thing. It is good because it increases the profit of the company, which, in turn, can then be put back into the economy thusly stimulating it. The price discrimination is a bad thing it cuts out potential customers that could have possibly given Uber business but were turned off at the price they would be charged.
2) Do you think politicians should limit what Uber can charge? Explain one argument in favor of capping Uber fees.
I, personally, do not think that politicians should limit the prices that Uber can charge. Uber has the right to charge what they feel is right given the time and place. If they were to undercharge for their service, then they would soon realize the downside of capitalism and go out of business. If they over charge they will also go out of business due to the lack of customers using their service. One may be in favor of politicians capping Uber's fees to keep yellow taxis in business and thriving. This may be a good thing because, in the end, the consumer wins and gets the best service for the best price.
3) How has the expansion of Uber impacted the Taxi market?
Since the advent of Uber, the Taxi market, has declined a substantial amount. Some think that it may be because of Uber, while others think that this is merely coincidental. In New York City, it may be because of the switch to CITI bikes or public transportation, such as subways or buses. Also, since the advent of Uber, the price of taxi medallions (licences) has been cut from around $1 million, during the summer of 2014, to around $690,000, in August 2015. This dramatic price decline has cut the value of all 13,771 medallions by $4 billion. This drop is a surefire sign that more change is to come due to the fact that it was such a steep decline in a relatively short period of time.
1) Explain Uber's "Surge Pricing." Is this form of Price Discrimination a good thing or a bad thing?
When demand in a certain area is anomalously high, prices are increased correspondingly. Given that drivers are paid on a flat 20% to 30% commission, this price escalation attracts Uber drivers into the area in question, allowing for the demand to be met. Moreover, the increased prices for this service dissuades a number of customers, which allows for the inflated amount of demand to be reduced, thus enabling the resulting demand to be met.
This policy is generally a beneficial system, as it allows for Uber to be able to react to the ebb and flow of supply and demand. However, it does pose the issue of giving Uber absolute power in setting prices, which can be construed as unfair for consumers.
2) Do you think politicians should limit what Uber can charge? Explain one argument in favor of capping Uber fees.
As it stands, Uber lacks any sort of cap on their demand-based increase in price. In times that a large number of people require transportation, such as natural disaster, Uber is able to exploit the widespread necessity for transportation and charge an amount astronomically higher than usual, given that consumers lack the ability to refuse the fee in this circumstance.
Their primary competitor, the original taxi market, is also massively disadvantaged by Uber's lack of restriction. Not only have they suffered tremendously from Uber's superior convenience, but taxi markets are limited by a governmental cap on the amount taxi drivers are allowed to increase their rates by. This causes a massive imbalance in the market, one that lend itself to a monopoly-like situation in which Uber is able to increase their prices capriciously without much repercussion.
3) How has the expansion of Uber impacted the Taxi market?
The convenience of Uber has taken a massive toll on the taxi market. At the conception of the Uber service, a notable increase in total taxi rides occurred. However, as the number of Uber based rides has increased from 300k to 3.5m from June 2013 to June 2015, the number of traditional taxi rides has shown an inverse trend, falling by 2.1m in the same span of time.
The "taxi medallion" has also seen a stark decline in price from the advent of Uber. Taxi medallions are the item that allows for one to run a taxi. Over the span of time of one year, these once-coveted medallions have seen a 30% fall in price, demonstrating the fall in demand within the taxi market.
John Lauria
Explain Uber's “surge pricing”. Is this form of price discrimination a good thing or a bad thing”?
Uber's surge pricing is the new system implemented that spikes up uber's prices around times like new year's eve, when more people need a taxi because they have been drinking. When there is a higher demand at the time for a cab, the prices jump higher up. For instance, if it's raining, the prices will go up due to a higher demand. Uber's prices are normally less than those of street cabs, but on special occasions, they can spike up to 7 times that of normal. I would say this price discrimination is a bad thing. Although it gains a lot of money for Uber, it can be overpriced if it's 7 times the amount. It would be unfair to customers and I think it would be ok if it were just a little more or double the amount. They could definitely lose a large fan base but i think also that if the consumers don't like the high prices, they should just take a regular taxi instead. Uber can charge whatever they want and they should be able to modify that amount based on supply and demand, but they shouldn't charge hundreds of dollars just because it started raining outside.
Do you think politicians should limit what Uber can charge? Explain one argument in favor of capping Uber fees.
I think that politicians shouldn't limit what Uber can charge. Before Uber, what did people do? They waited for a taxi or found a ride somehow somewhere else. I don't think politicians should limit how much Uber charges because they are making their prices to high, because if people don't like them, they don't have to use Uber. I think Iphones are overpriced, and if the price was high enough, then I don't have to give them my service, I would find a different phone. The same thing goes for Uber, there's just a large demand for this taxi service. On the other side of the argument, say if people were in an emergency and had to get somewhere fast, or if a natural disaster happened, then i would say that the prices should be lower because then some people are in desperate need and can't afford it, and need a quick ride somewhere. A good idea Uber should incorporate is 5 miles completely free in case of an emergency.
How has the expansion of Uber impacted the Taxi market?
A Lot of the growth of Uber comes from people using the Uber service instead of a traditional taxi. This damages the taxi business significantly, they don't get nearly as much service anymore. Uber has grown 3.5 million rides in 2 years and Taxis have decreased 2.1 million in the same 2 year period. Also, Uber has a lot more business now at night, because consumers want more comfort and luxury at night time, whereas taxis no longer get much business at night time due to its more luxurious competitor.
Cameron B.
1. Uber’s “Surge Pricing” is a form of increasing the price of a driving fare for the individual in need of the ride. This increase in price is only due to high need for drivers for a specific reason. For example, these articles say “surge pricing” occurs during bad weather, natural disasters, rush hour, large special events, or even sometimes before Sunday brunch. This form of price discrimination is a good thing because it rains true to the point of supply and demand. When supply is low and demand is high, it is understandable why the drivers have to charge 2X more for their fare. It goes the same for when there are a lot of drivers and no people that need transportation the price decreases. Our economy is the same as this price fluctuation. It is a microcosm of modern economic situations.
2. I don’t think politicians should limit what Uber can charge because it is a company keeping up with its demands the way it wants. That is capitalism. The entrepreneurs have a lot of say in how they run in their business, which gives them freedom to charge what they want. It is up to the people to stop buying the product if they disagree with it not the politicians limiting it. People could be in favor of politicians capping the price on fees if they don’t have a lot of money and can’t afford the “surge pricing” prices.
3. The expansion of the Uber industry has decreased the Taxi market. The taxi’s not have more competition with another transportation industry because they are much easier to use and are more reliable. To contact Uber all that has to be done is to request their service via a phone app. That is much easier than trying to hail a taxi in a street and hope that one is available.
Nikolai Doski
1)Uber’s prices increase when there is a high demand of customers, from 2 - 8x the original cost. Although the extreme price jump like 4x and up are rather ridiculous, the practice of increasing prices during times of high demand is good because it gives incentive for more drivers to come to the area, which in turn will lower the demand; this is a simple cycle of supply and demand: when there is a demand for more drivers, Uber incentives more drivers to come by increasing the marginal benefit of picking up customers with an increase in revenue.
2)Yes, because the practice of raising the prices in certain situations such as bad weather or natural disasters are opportunistic, and serve to be a factor that puts off both the customers and the employees. Uber should not take advantage of situations such as weather, which the users first of all cannot control and secondly have a greater need to get to their destination safely, to increase the cost of the ride because it will rather than increase the supply of drivers, decrease the demand for drivers as more people look for alternative means of transportation because the pricing surge had increased the price to an absurd level.
3)Uber has created a new competitor in the Taxi market, and thusly has begun to take some of the customers from taxis. Statistically the taxi market has only lost about 15% of its market so far, over the past two years, but it is the taxi markets response of dropping prices by 30% which although may bring back some customers will likely only hurt the taxis further by decreasing the potential income of drivers, who need the revenue in order to maintain the car and such, because most customers who are still using the taxis rather than Uber are those that are willing to pay more for the taxi service.
Matt R.
1) Just as it seems unfair when charges for drugs are different based on the country or train ticket prices vary based on the buyer age, this price discrimination is due to Uber costs varying based on the time of the journey. I don’t believe this is necessarily a bad thing. As the article states, lowering prices to a single price for all may increase sales, but it could decrease maximum profit by lowering prices for people who would have been okay with paying more. I also believe that the economy does not need to regulate prices as supply and demand would do that by itself. If people are unhappy with the prices, they will stop buying it and then Uber will be forced to lower prices. If this is not already occurring, that means enough people are willing to pay the price.
2) Just like in the last answer I stated that “I also believe that the economy does not need to regulate prices as supply and demand would do that by itself. If people are unhappy with the prices, they will stop buying it and then Uber will be forced to lower prices. If this is not already occurring, that means enough people are willing to pay the price.” I am a person who is in favor of less regulation as a market and free economy should be the thing regulating prices, not politicians. I am not saying that I agree with Uber’s prices, but I do not believe they should be forced to cap off at a price. One argument for putting a cap on the prices, however, could be the example given in the third article where this guy was charged and forced to pay $179 instead of the regular $65 due to the surging price. Keeping it fair for the average person could be an argument given, although I disagree with it.
3) The article states that the expansion of Uber has helped improve the taxi market. This is because of the peoples’ sensitivity to price, more drivers are getting onto the road making private cars for hire increased dramatically. The surging prices of Uber has encouraged more taxis to be present depending on the demand causing the market to grow in relation to the demand.
Darian K, period 5
1. Uber’s Price surging is the company’s practice of raising rates when Uber rides are in high demand, such as rush hour, bad weather, and big events. Depending on your point of view, price surging can be either good or bad. The company itself makes more revenue since rates can easily rise to over $200, which is good for Uber. However, some drivers admit to feeling embarrassed or pitiful when rates are surged, and customers “despise” the higher rates. For the company as a whole, it is a good practice, but it is not good for the customers and drivers.
2. I think politicians should not be able to limit what uber can charge because Uber informs clients of the higher rates before the customers accept the ride. According to Uber spokesman Matthew Wing, the Uber app provides multiple warnings of the rates and requires the riders to confirm their knowledge of a higher rate. Thus, although price surging may not be ethical, politicians shouldn’t be able to limit the prices because customers are made aware of the rates.
3. The expansion of Uber has caused medallion prices to drop 30% and an average drop of taxi rides of about 14%. The decrease in taxi usage is most prevalent between 11 PM and 5 AM. As Uber expanded from 300,00 rides to 3.5 million from June 2013 to June 2015, the Taxi rides have dropped by 2.1 million.
Kate R
Discussion Questions:
1) Explain Uber's "Surge Pricing." Is this form of Price Discrimination a good thing or a bad thing?
Uber’s surge pricing is where they charge more on weekends and on holidays than they normally would. At first it may seem like it is a bad thing but when we look closer at the issue, we realize that it may be necessary. Without the surge pricing taxis would not want to be out on the road at times like 2 am. With surge pricing they have an added incentive to stay up late on a Friday when the average cabby would have wanted to stay home. Also it is necessary to ensure that there are rides for everyone. When the surge comes on those who can wait for a ride will and drivers will make their way over to those areas to get a larger sum of money, thus lowering the demand and increasing the supply. However many drivers stay the they dislike Uber’s surge pricing because it is so unpredictable and they would prefer a steady income that they could rely on. New York State is contemplating putting a limit on how much more Uber can charge and there is a lot of support for this from both drivers and consumers.
2) Do you think politicians should limit what Uber can charge? Explain one argument in favor of capping Uber fees.
I think that politician should be able to limit what Uber can charge. I think this because paying 8 times the amount the normal price of a ride during something like a hurricane is ridiculous. Although Uber’s business plan is based off the economic principle of supply and demand it is not necessary to increase the price by so much. This can be proven by their main competitor Lyft. They cap the surge prices to only 2 times the normal fare, so clearly Uber could do this as well.
3) How has the expansion of Uber impacted the Taxi market?
It is clear that it is not just Uber that has impacted the Taxi market and that there are other things that could explain the decrease of the revenue collected by taxis. For example the new citi bikes which turned out to be the biggest of their kind, or the new green taxis which only travel around the Manhattan area. Also not everyone who uses Uber would have been taking a taxi. They could have taken the subway or bus. So clearly although Uber might have taken away some of the business away from taxis, it is obvious that not all of the lost revenue can be found in Uber.
Andres Z. 9/25/15
Uber’s Surge pricing comes into play when the amount of demand for alternative methods of transportation rises, alternative to those that are mainly used such as common taxis and train systems that is. The debate with this strategy used by Uber is that the company is taking advantage of the fact that people who rely on the common transportation system as their only way to move around their area are now being forced to pay overpriced fares for a service that could be up to ⅛ that price on any normal day.
The term price discrimination is used when there are different prices for different buyers in order to maximize the profit and sale of the business. However unfair this may seem to some people, in my opinion, Uber is just applying their knowledge of supply and demand to take advantage of a passing situation. They are not just setting permanent fixed prices for everyone and are equally raising the prices for all users. Therefore, no one has a true advantage since everyone is paying the same inflated price.
In the end, it all comes back to whether anyone can do something about Uber’s surge pricing techniques. While the government does have laws pertaining to public transportation that are able to keep surge pricing in check, Uber is a private company where users themselves chose to use their system. Therefore, those who are in favor of letting Uber continue its business as usual will say that this is just an example of our capitalist economy and obviously if the prices are way too inflated uber would generate no revenue and would be forced to lower their prices. The argument for capping Uber’s fees is that not only is this bad for the public, but it is also hurting the workers who are not for-hire drivers who also need to earn a living. In my opinion, the growth of the for-hire transportation companies is a great benefit to our society. It gives us everything from security to a better environment while also creating a new market of competition while opening up new jobs.
As I mentioned before, the growth of Uber is said to be responsible for the decline in profit of the taxi market. The thinking process behind this claim is quite straightforward. More people use Uber less people use taxis. However, this is the real world. These are not the only two option people have. People can take yellow cabs, Uber vehicles, the Subway, Borough Taxis, Buses, Private Vehicles, Bicycles or they could even walk. They could even stay home!
Therefore, one cannot entirely blame the decline in taxi profit on just this one company who happens to be doing really well. Uber is where it is because of good management and because it has a good service. The company should be left to grow and the market, as always, will come to regulate their progress.
Ryan S:
Surge Pricing is Uber’s solution to increased taxi demand. When demand increases, Uber increases the fee for a cab. This action stimulates the supply, or the number of drivers on the road, faster than it decreases the demand, so its goal is obviously to ultimately generate increased revenues. I think that Surge Pricing is a good thing for Uber because it helps to ensure that a cab will always be on hand for a customer; if no cabs were available at peak hours, people would quickly get fed up with the app.
I think politicians should be able to cap the Uber charge at a more reasonable price (such as 2x) because an 8x fee on a somewhat unsuspecting customer could result in a $300 ride home. From a driver’s prospective, it also makes sense to cap the fees: Uber wants drivers on the road at all times, not just when a 3x or greater fee gives them a huge incentive, and drivers want more regular hours than “hey look its a surge.”
The regular taxi market has declined 14%, and though The Economist points out that “the benefits enjoyed by Uber and its customers and drivers have not come entirely at yellow cabs’ expense,” it is evidenced that more than half of Uber’s success is the result of stealing customers. As a result of Uber, the total value of the medallion taxi market has decreased by $4 billion, and there is no doubt that this is much higher than the value of the new Uber market in the city.
Chris Q
Chris Q.
1)Uber's “Surge Pricing” is a way, unlike other taxis companies, to get the highest price from the customers that are willing to pay the high price. In days which the demand for taxis is high, Uber raises their fees in order for their most demanding customers to get the ride they want. This counters the belief of a fixed price, because in a fixed price the customer that is willing to pay more might get beaten or cheated by a customer that doesn't value it as much, the price attracts all customers (i.e New Years Eve). This price discrimination with uber is fair because it favors both the driver and the passengers. In theory when demand is high, The passenger with the most demand will pay the price they want ahead of one who won’t. The driver will also get paid more because the price has just risen and they get 80% when it is their car. In theory everyone wins and is happy
2)Politicians should limit what uber can charge. Uber fees should be capped because the other competitors (yellow cabs) are also capped. Even though their are other ways of transportation in the city, the idea of spiking up the prices is unfair for people. The surge in price could be affected simply by the weather. A capping of the price surge would also protect the driver from getting a bad rating from something they have no power over.
3)It could be debated whether Uber has damaged the taxi market, or whether it has just replaced a market that needed repair and something new. Studies revealed in 2013 show that the amount of uber fairs coincide with the general amount of riders in NY. However the data also proves that as Uber services have become more used, yellow taxis have dropped significantly. Overall, Uber is believed to be an impact (whether positive or negative) that the taxi market needed).
Keith J. responding to Dara K. regarding Uber’s surge pricing. Uber’s surge pricing works by charging passengers passengers a much higher fee; “which typically happens during rush hour, bad weather, big events or on certain holidays.” So, a ride that may normally cost $60 will now cost the passenger over double what he or she would normally pay.
This type of price discrimination is a bad thing to passengers because some may be unaware of this spike in prices. Although it is said by Uber spokesman Matthew Wing that, “Almost no other company does as much as Uber to make sure users are aware of price changes, including multiple warnings, requiring riders to confirm they are accepting a higher rate”, it is hard to believe that the passenger would be willing to pay such a higher fee. Also, are the riders being told how much of a higher fee it will cost them? Some passengers may think a higher fee will just be a few extra bucks when actually it can be over double the price.
Keith J. responding to Dara K. regarding placing limits on what Uber can charge. I think politicians should limit what Uber can charge to a certain degree. As David Greenfield said, “Just because it rains outside doesn't mean you should pay $500 for a $50 ride...The yellow cabs are regulated, it only seems fair that we should regulate all the others.” Uber should be limited to only be able to charge up to twice the normal fare of the ride. Charging over double is not fair to the passenger. However, Uber should not be regulated like yellow cabs because then uber will basically become what the yellow cabs have turned into.
Keith J. responding to The Data Team regarding Uber’s impact on yellow cabs. The expansion of Uber has impacted yellow cabs greatly. Uber is taking away business from yellow cabs due to Uber’s easy access on a mobile device and being able to select your driver. Statistics show, “The average price of one of the city’s 13,771 medallions has fallen from an average of $1m during the summer of 2014 to $690,000 over the past three months, an aggregate loss of some $4 billion of value… Taxi rides between 11pm to 5am have fallen by 22% since June 2013, whereas trips at all other times are only off by 12%.” These statistics give evidence that Uber has been taking away business from yellow cabs since Uber’s popularity has been increasing.
Jacqueline S
1. Uber's surge pricing is a controversial practice of raising prices for rides when demand is high. This raise in price can range from double the usual price of a ride to 8 times the normal price. Surge pricing usually happens during rush hour, bad weather, big events, and on certain holidays. This form of price discrimination is a bad thing because the customers have no control over making the price surge because they can't change the weather or the day. For example, customers have to pay the price hike during Hurricane Sandy and the Sydney Hostage crisis because they had no choice. While businesses may see this as the perfect time to raise prices, Uber is raising theirs far too high. It is also unfair because the company, Uber is forcing their drivers into awkward situations and is causing them to do fewer rides and receive lower ratings because of the company's policy.
2. I think politicians should limit what Uber can charge because Uber is taking advantage of their customers and how they are desperate. Politicians should cap Uber fees because taxis can't charge more than twenty percent over their base fare and Uber is the same kind of company. If taxis are regulated, than every other form of the same business should be regulated as well. This limit on the price surging will also help the driver because the consumers won't feel like they are being price-gouged and take it out on the driver's rating.
3.The expansion of Uber has effected the taxi market by stealing the customers who previously would've used a taxi. The majority of Uber's growth has come from previous taxi customers and while Uber expanded tenfold over the past two years, yellow cabs' hail volume has decreased by 2.1 million. In fact, only thirthy-five percent of Uber's growth had been in addition to the preexisting market demand. The rest of their growh came from trips that otherwise would have gone to taxis. This decline in the taxi market has also led to the price of one of New York City's medallions decreasing from $1 million to $690,000 in less than a year.
Angelina c.
Uber's “surge pricing” means that the fee for a cab in an area may be increased based off of the amount of people who are requesting uber drivers near you. For example if a lot of people in your area are trying to get uber drivers the price may increase as the demand increases. Uber claims that this increase in cash is more incentive for the drivers to get to the area with a surge to fill the demand quicker, but many drivers say that it isn't usually worth it to go to a surge because by the time they get there the area has already cleared out and the surge has died down. This “surge pricing” isn't necessarily a bad thing for those drivers who do get to go and pick up people they get to make some more money. At the same time it isn't good for those customers who may have to pay up to eight times more for a ride, or have their order randomly cancelled and when they request again the price has increased due to a surge. Not only does this cancellation happen to customers it happens to drivers, which may cause them to lose customers because people will give up and go to lift or a plain old taxi.
I think that the Uber drivers prices should be regulated because all other taxis and transportation in the city is regulated and the make it a more even competition Uber should be regulated as well.
The expansion of Uber has cut into the taxi market, but not as much as originally thought. the price of medallions for taxis has fallen 30% but the taxis have only lost 14% of riders, and Uber still has less business in the city than the yellow cabs do which some attribute to the fact that Uber is easier and more reliable than the taxis so instead of taking business from texts they are making a new market for themselves.
1. The surge pricing method used by Uber allows the company to raise taxi fares during periods of high demand such as bad weather, holidays, rush hour, and big events. An Uber driver can see where these surge price areas are and can drive to these areas in hopes of getting more money for a ride. Uber makes a conscious effort to make this fact clear to a customer in need of transportation to clear up confusion about consistency in pricing. This form of price discrimination is good because of the financial benefits it can provide for a driver looking for a little extra money. While it may be more of an inconvenience to a customer, the customer is fully aware of the price changes when they make the driving arrangement on the Uber app. Customers can reject the ride or use a different company or transportation service. Uber is not the only method of transportation accessible, and the surge pricing helps increase demand for these other methods such as yellow NY taxis and Citibikes. Furthermore, Uber’s prices may not always be consistent, but its service is. Uber will always be providing the same quality of service and time of travel for a customer who is desperate to get from one place to another. For a customer who trusts Uber’s services, the prices will not stop them from riding in an Uber car. The idea with surge pricing is to recognize areas of high demand, and an Uber car traveling to that area to help will only further strengthen the company’s reliability.
Surge pricing works in other markets such has hotels and airplanes, and the system successfully creates demand within these markets and is an accepted factor for customers.
2. While I do agree with the surge pricing mechanism used by Uber, I think that government should place some limits on how much Uber can charge. An Uber driver can consistently cancel arrangements with customers, making the demand higher and therefore increasing the price of the service more and more. This is inconvenient for a customer and decreases the quality of service the company is providing, lowering a customer’s reliance in the company. An example of an inconvenience with the surge pricing system is a worker in NYC who uses Uber everyday for the same route who has to pay more during the holiday season in December when the city is more crowded. While surge pricing is practical to a degree as seen in airplane and hotel fares, it needs to be stopped at a certain point before it is questionable. Once the price of a hotel room gets too expensive, the customer will look into another hotel instead. An Uber customer will do the same and use an alternative method. Government needs to limit the extent of which surge prices can go to, and not let them become ridiculous and unaffordable otherwise surge prices will turn away more customers.
3. The expansion of Uber has created more competition in the taxi market. Although Uber is still up and coming and not fully established as a source of transportation as great as the taxi market, there is definitely a recognizable impact on the taxi system. The use of yellow taxis has decreased in the past two years and when comparing the statistics of several years to one other, there is a more significant decrease. However, this information is not solely based on Uber as an alternative transportation source. Bikes, walking, and other driving companies may be causes for the taxi market decrease that are not accredited for. Uber is definitely a suspect for the decrease in the taxi market, but it is not necessarily the full answer to it.
Abbey Kostecki
1. The process of “surge pricing” that Uber uses is the practice of raising the price of a ride if the demand in the area is high. The idea is that the app will show drivers which areas have high demand and therefore higher prices, giving them more of an incentive to travel to these areas. Then, as the drivers pick up more people, the demand will go down and the prices will decrease. This leads to the cost of an Uber ride to be much more expensive during holidays or on weekends than the normal fare would be. Surge Pricing, will an understandable concept, is not good in practicality for the driver or the passenger. For drivers, they would constantly be chasing wherever the surge went in an attempt to make enough money to make a living, and often the price would go down again before they can get to the location. Man drivers feel as though they are “playing a game of hide and seek” when it comes to finding costumers. Passengers also complain about the surge pricing. Many complaints are about high prices that are experienced during surges. Others are about how unexpectedly the surge would appear. This then leads many of the passengers to leave bad reviews on the drivers, which can hurt a driver when they attempt to get future costumers.
2. I think that politicians should limit what Uber can charge, but as opposed to just banning surge pricing, they should be attempting to cap the amount that the surge can bring up the price. Currently there is no limit on how much the surge can increase the price, meaning that if demand is high enough, the price of a ride could increase by many times the original fare. And while Uber says that the average surge would not bring the price up to more than 2.8 times the original price, it is unethical that it isn’t regulated. One politician who is attempting to do just this is New York City Councilman David Greenfield. He is trying to cap the surge pricing at 2 times the original price. His reasoning for this is that since yellow taxis are regulated and can’t increase their price by more than 20% of their original fare, it is only fair if the same is said for Uber and other companies such as Uber.
3. The expansion of Uber has not destroyed the empire that taxis have created, nor has it even come close as taxis are still making much more than Uber does per year. However, Uber certainly has hurt the taxi industry. This is because, as Uber grows, more people are using it. And around 65% of the people who are using their service are people who otherwise would have used a taxi. From June 2013 to June 2015, Uber has grown from getting around 300,000 rides per month to getting 3.5 million. In this same time period, yellow taxis rides have dropped by around 2.1 million. Most of this is occurring at nighttime, when Uber is hurting the taxi industry the most. This is because night is when most people prefer the convenience and comfort of Uber’s services, leading to taxi rides dropping 22% between 11pm and 5am. During the day time however, taxi rides have only dropped 12%.
Lauryn S.
1.Uber engages in “Surge Pricing” when companies go through the process of raising prices for rides when the demand for services are high. This “Surge Pricing” has brought about many complaints from Uber riders and they dislike the final total at the end of their ride, no matter how long the ride was. I believe that this form of Price Discrimination is a good thing for business, but a bad thing for customers. Because businesses know that people are in a rush and want to get around quickly, they know that they can charge whatever they want (within reason) and people will pay it. However, when the prices do go up, customers become upset.
2.I do not think that politicians should limit would Uber can charge because the only reason that politicians are getting involved is because Uber is creating a lot more competition in NYC and is reducing NYC’s tax income. However, Uber is arguing that they are just a business trying to make money and if NYC has a problem with their company, then they should find a new way to compete with them and build up their market. One argument in favor of capping Uber fees would be that if Uber continues to grow at the rate that they are increasing, people will see no need for NYC taxis and they will only want to take Uber's all over the place instead.
3.The expansion of Uber has impacted the Taxi market in that the easiness and speed of the Uber app has an appealing side to customers that the Taxi market doesn’t supply. The Uber app allows anyone with a smartphone to call a vehicle and pick them up, and in return, the app tells them when their car is outside, directions to the customers destination is already in the Uber car’s GPS, and there is no need for the customer to stand outside and flag down a taxi for extended periods of time. The Uber company has also led to a $4 billion loss within the taxi market, which has led to the involvement of high-ranking officials in NYC.
Mike F.
1) I disagree with surge pricing because, even though it gets more drivers on the road, it is ridiculous to charge a person more than triple the typical price due to high demand. This would likely cause individuals to resent Uber. Uber needs to find a new method in which they maintain a high number of drivers without charging people high amounts.
2) I don’t think politicians should limit what Uber can charge because consumers can use whatever they please. If Uber charges crazy prices, individuals will look to other services or pay the price.
If politicians capped Uber’s fees, people would no longer feel as if they were being price-gouged. It also would be fair because yellow cabs are being regulated.
3) Uber, in addition to other new services like Lyft are impacting the Taxi market negatively. In 2013 Citi Bike became another major competitor and is now “the largest of its kind in America.” In two years, Uber had a gain of 3.2m rides while yellow cab’s dropped nearly 2.1m. All of these new services are causing damage to the taxi market.
1. Uber’s “surge pricing” follows the basic laws of supply and demand: prices increase when the demand for drivers increase and the supply of such drivers is low. This situation occurs during peak travel hours and peak travel days when the demand is high, as well as during poor weather conditions when the amount of drivers on the road decreases. Prices are allowed to be raised up to 8 times the normal price during such hours, although Uber states that prices rarely rise over 2.8 times the price during non-surge hours. While this form of price discrimination is good in theory--by claiming to increase driver revenue and to increase the amount of drivers on the road during antisocial hours--the application of this system is quite flawed. Because of the “inflexibility of Uber’s matchmaking fee, a fixed 20% of the fair,” it fails to efficiently carry out the principle of supply and demand. Therefore, Uber’s current surge pricing system is not a fully effective or beneficial price discrimination process.
2. The government should limit the fares that Uber can charge in order to maximize their business as well as customer satisfaction. When prices are allowed to triple and quadruple within a few minutes time, customers as well as some drivers become increasingly aggravated. For the customers, some feel that the quick dramatic rise and fall of prices subjects them to price gouging. Though the Uber app has riders agree to fare prices before they enter the vehicle, surprising price increases still anger customers who have no choice to accept the unreasonable prices. Those who have the flexibility to wait for prices to fall will turn away cars, therefore turning away potential profit for the company. Price caps would also come as a relief to some drivers because the constantly fluctuating prices make it hard to make ends-meet. Trying to chase the surge can be aggravating for drivers who miss this opportunity to make more cash as well as cause a decrease in their ratings if riders unhappy with the price decide to take out their frustrations with the company’s policy on their driver’s rating. Steady rates or capped rates would allow drivers to estimate their earnings and allow them gage how often they need to work in order to make a living.
3. The effect of Uber expansion on the taxi market has been a topic of debate since the company’s arrival in NYC. Though it is not the only rival to the taxi company, with “apple-green boro taxis” and “the Citi Bike bicycle sharing programme” also competing for customers, arguments can be made for and against Uber’s supposed damaging effect on the taxi market. The argument can be made that not all of Uber’s customers have been taken from the taxi market, Uber has been proven to cause a decrease in taxi profit, especially between the hours of 11pm and 5am, where the taxi market has fallen 22% since June 2013. This correlation between taxi decrease and Uber increase can be found through the comparison of the data released by Uber and the taxi market showing the usage of both companies during a 24 hour cycle. It can be concluded from this data set that the “majority of Uber’s growth has come from substituting for taxis rather than complimenting them.”
JesseW -
1. Surge Pricing is an Uber policy that causes prices to increase up to eight-fold when there is a high demand in a certain area. Uber does this in order to monitor supply and demand because their drivers are paid on a commission. This causes drivers to “chase the surge” or go to places of high demand. It also forces customers to cancel their rides because of high prices. This helps meet the demand and bring the prices back down. I feel like this form of prime discrimination a good thing because it means that Uber can have lower prices, in general, than their taxi competitors while still maintaining good service in areas of high demand. In the taxi industry, people often cannot get rides when there is high demand in an area. The “price surging” policy alleviates these issues and allows people to get rides.
2. I believe that politicians shouldn’t limit what Uber charges. If people are unsatisfied with Uber’s prices, they can easily use a taxi or one of Uber’s many competitors. Once Uber notices that their sales have dropped, they will limit the charges themselves. An argument that one can make in favor of capping prices is that it will provide a greater amount of people with inexpensive rides that will further promote the market.
3. The expansion of Uber has crippled the Taxi market. Uber provides better service and a better overall experience than Uber and, as a result, people prefer to use the Uber service. Uber allows the customer to directly input their destination and directly charge their credit cards. Uber also has drivers come to the customer and in more discrete and fashionable looking cars.
Michael H.
1. Uber's surge-pricing is a system that Uber uses in order to generate a higher income at times when rides are in demand and a system that they claim is in place to create a more efficient experience for riders. I think that Uber's surge-pricing is a good system, a system which only naturally responds to increased demand in a proper fashion. It might be a form of price discrimination except I believe it is a completely understandable one and should be completely allowed. As demand for a product increases, its price should as well increase, because it is the job of a company to generate income. The surge-pricing also increases the amount of drivers in a certain area so that more riders may recieve better service.
2. I do not think politicians should limit the amount of money Uber can charge for their services. Uber, unlike the regulated taxi services of the city, is not regulated by the government and is an independent service. The government has no right to intervene into Uber's service and alter prices. Uber's independent pricing also is a result of competition, but competition in our economy is a good thing.
3. The expansion of Uber as a service has naturally taken a chip out of the regulated Taxi service, but rightfully so. It provides better service than the regulated taxi driving services of the city, and so it has beaten out the generic yellow cabs. It is a good thing, because Uber is much more reliable, so people will go to it and give it their money because of the good services they provide.
Matthew D
1. Surge pricing is when the price of the uber increases during bad weather, a busy time or any other inconvenience. This discrimination pricing is good because when the ubers are increasing in use the price increases to motivate the drivers to do a good job and it will discriminate some people from using them with the increased price.
2. I don’t think politicians should be able to cap uber prices. Uber should be allowed to do whatever they would like. If uber prices are too high, people will resort to other sources of transportation like taxis, trains, or subways. Uber isn’t a monopoly so they there prices shouldn’t be regulated. One good thing about capping uber prices is uber will be an easy and cheap source of transportation. uber's could replace taxis or subways as public transportation.
3. The expansion of uber has decreased the amount of taxis used. Taxis are still being used a lot more on a daily basis than Ubers. However, Ubers are increasing in use and taxis are increasing. Uber's are starting to replace taxis as late night transportation because you can schedule your pickup before you go out.
Jacqueline L
1. Uber’s “Surge Pricing” is when they increase the prices of their fairs when their demand is high. They use the law of supply and demand where the suppliers are the drivers and the demanders are the riders so when there’s not enough cars to drive the amount of people in need of a ride, the price goes up. This form of price discrimination is a bad thing. Yes, it makes sense to increase the price when the demand is high,but they should set limits on it to make sure the prices don’t go too high. Many customers and drivers don’t like surge pricing either. Some drivers like the surge pricing to get extra cash, but others would rather have a set price than ones that always change. Customers are annoyed by it too because many of their rides have gotten cancelled purposely by the Uber drivers so the prices will surge.
2. I do think politicians should limit what Uber can charge. Setting limits on their prices will encourage more people to use Uber. People will know that the prices won’t be as high as they used to during times of high demand and will be more likely to use Uber and give their driver a better rating.
3. The expansion of Uber has actually been increasing the taxi market. It has caused taxis to vary with demand when there’s surge pricing. When Uber drivers are high in demand taxis will get more business from the people who couldn’t get a ride from Uber or who don’t want to pay the increased price.
William S
1. Uber’s price surging causes fares to rise during holidays and holidays when demand is higher than the average night. Although this price discrimination may seem to take advantage of customers who need an Uber car during the holidays, this system is simply reacting to the low supply of drivers to the high demand of customers. Not only is this price discrimination a natural product of the Free Market, it is also good for the taxi industry in general as it lessens the restrictions that government has placed on the service by essentially forming monopolies and enervating all competition within the taxi service industry. And if people would rather stick with fixed fare rates they can simply choose an alternative the Uber and will force change on the company.
2. I do think there should be a limit on what Uber can charge because the equilibrium price of the driving service during extreme demand might be too much for some customers and not being able to pay for an Uber driver simply because you cannot afford it is inherently unproductive and directly hurts consumers. Also because Uber decides the price of fares and not the drivers, unrestricted fares could hurt drivers who would settle for a more convenient price for the consumer.
3. With the introduction of Uber into the Taxi market, the price of New York City’s medallions has fallen $310,000 in 3 months. Coupled with this is a 14% decrease in taxi use by the public, which shows how the Uber service is replacing the need for taxis in certain circumstances. This is especially true during the later hours of the night when the accessibility of Uber drivers outweigh their price discrimination.
1. The principle of Uber’s “surge pricing” revolves around supply and demand. When the requests for rides go up, such as on weekends and holidays, rates can shoot up to eight times the norm. According to Uber, the pricing is not only in accordance with economic principles but also an incentive for drivers to fill the high demand. When they see an area in high demand, the higher fares should motivate them to accept those rides. Finally, as the people who are willing to pay the higher fares get their rides, the demand begins to fall and the prices return. This form of price discriminationㅡhaving different prices for the same serviceㅡis mostly a good thing. Consumers who are “high-rollers” and willing to pay more can benefit because they have the option of using Uber when everyone else (the “cheapskates”) are taking taxis. Uber benefits from the increased revenue, as do the drivers who accept the ride requests. Although I think there should be a limit to the price surge, we live in a market economy which is ultimately dictated by supply and demand, and surge pricing is a result of that idea.
2. There should be a limit to what Uber can charge because, in theory, the surge could be infinite. Not only is this clearly unfair to the consumer, but it actually could hurt the drivers (or at least fail to benefit them). As one driver explained, because the riders rate their driver, the high prices often cause negative reviews, decreasing the amount of rides they will give thereafter. Additionally, the surge pricing creates a volatile environment which is undependable for the drivers who rely on the money they make. In many ways, although higher prices potentially aid drivers in the short-term, they only hurt them in the long run. Therefore, capping Uber fees is a necessary task for politicians to take on.
3. The expansion of Uber has heavily impacted the taxi market. Its convenience and luxury has provided stiff competition to the yellow cab establishment, as demonstrated by the decreases in rides provided by taxis. For example, some economists have estimated that the value of the taxi licenses has decreased by about $4 billion this summer alone. Additionally, it is significant that taxi rides have the most pronounced decreases during Uber’s peak hours (11 pm to 5 am). During these hours, taxi rides have fallen by 22% in the past 2 years, while all other hours have only decreased by 12%. Although some of the evidence that Uber alone has been responsible for the decline of the taxi market is “circumstantial,” it is definitely suggestive of a negative impact.
Darian K.
Period 5
1. Uber’s Price surging is the company’s practice of raising rates when Uber rides are in high demand, such as rush hour, bad weather, and big events. Depending on your point of view, price surging can be either good or bad. The company itself makes more revenue since rates can easily rise to over $200, which is good for Uber. However, some drivers admit to feeling embarrassed or pitiful when rates are surged, and customers “despise” the higher rates. For the company as a whole, it is a good practice, but it is not good for the customers and drivers.
2. I think politicians should not be able to limit what uber can charge because Uber informs clients of the higher rates before the customers accept the ride. According to Uber spokesman Matthew Wing, the Uber app provides multiple warnings of the rates and requires the riders to confirm their knowledge of a higher rate. Thus, although price surging may not be ethical, politicians shouldn’t be able to limit the prices because customers are made aware of the rates.
3. The expansion of Uber has caused medallion prices to drop 30% and an average drop of taxi rides of about 14%. The decrease in taxi usage is most prevalent between 11 PM and 5 AM. As Uber expanded from 300,00 rides to 3.5 million from June 2013 to June 2015, the Taxi rides have dropped by 2.1 million.
Victoria T.
1.“Price Surging” is the increase in prices during certain times, such as weekends and holidays. For Uber, the price of their taxi service increases during these time periods, making it more expensive and less desirable for consumers. Many marketers believe that this will push customers away, considering the weekends and holidays are the most common time for the need of a taxi. This type of price discrimination is not necessarily a bad thing. It reflects the principle of supply and demand, considering the supply of cabs are low on at late times and weekends and the demand is very high. The times that people want a taxi are typically the times that cab drivers do not want to work. The jump in prices is justified by this principle, considering supply and demand correlates with pricing. The pricing strategy has actually helped the taxi market, since “the temptation to earn more is getting more Uber drivers onto the roads at antisocial hours” (Pricing the Surge). On the other hand, price surging may potentially decrease the revenue for Uber. Less people will use the service during the times of the price surge, and consumers may decide to use a commercial taxi service, rather than the Uber service.
2. I do not believe that politicians should limit what Uber can charge. I believe it is us to the consumers whether or not they want to pay, and the company whether or not they want to risk losing customers. It would be beneficial to customers if the government did regulate the prices, however. The price surging could be looked at as illegal, since it is a form of price discrimination and customers are being charged more on certain days that they did not technically agree to. The capping of priced would help consumers pay a reasonable price for the taxi service.
3. The expansion of Uber has helped the taxi market in some ways. It has boosted the use of independent taxi services and drivers are willing to work in the undesirable hours with the increase in prices. However, “ it may fail to optimise the matching of demand and supply” (Pricing the Surge) since it only works during quieter times, rather than the busy holidays or late nights. With the implementation of the pricing surge, consumers are less likely to pay the high fees from Uber, and more likely to take a commercial taxi company. The oppurtunity cost, in this case, money, is simply too high on the times that people need a taxi.
Will L
Uber’s surge pricing is a method that Uber uses to get more drivers into an area that has does not have enough drivers at a certain time. During peak times, where the demand is high for Uber drivers, Uber will raise the price of the fares to encourage more drivers to go to that area so that they can get more money in their own pocket. I don not believe this practice is price discrimination, as during peak times many other business raise their own prices, for the sake of profit alone. Some of these business include, airlines,hotels, theme parks and restaurants. Also it is still the customer's choice to accept the ride and to be in the busy area at the time.
2. A. I do not believe that politicians should limit what Uber can charge as Uber is a privately owned corporation that is not owned by the government or necessary for the good of the people. People make the choice to be where they are at the time and have to suffer the consequences of facing higher fares. We choose to live on Long Island, which is one of the most expensive places to live in the country, does that mean the government should limit how expensive the houses cost?
B. One argument in favor Uber’s price capping would be that it has been reported that, many ride requests are unexpectedly dropped when drivers choose to move to an area that has price surging where they can make more money.
Uber’s expansion has largely hurt the taxi business as they now are competing with taxis for customer fares. Studies showed that less people are taking cabs now in favor of Uber which is more convenient.
Ap Economists HW
Noor C.
1. The "surge pricing" that Uber does is to deal with a situation when there are less drivers in the road with a high demand from consumers therefore to give good service, they have to increase the fare price. This price discrimination is unfair to consumers.
2. Politicians should limit the fare price because the consumers don't know the price after the ride and this violated consumer protection act. David Greenfield planned to cap the price surge which will help the consumers from paying too much over weather conditions and road conditions.
3. The expansion of Uber created an unfortunate series of changes in the taxi market for those who brought a medallion have loss thousands of dollars and for those invested heavily in the taxi business. In short, Uber is playing an unfair game.
Doug L.
1. Uber's "surge pricing" is when they charge crazy amounts of money when demand is high for their service. They are basically taking advantage of people because they know they won't go anywhere else for the same service. This form of price discrimination is very bad.
2. Yes I think that politicians should limit what Uber charge. If Uber's prices were to be lowered, they might get more customers than they had before. As most things go, more customers equals more money.
3. The expansion of Uber basically made all other taxi services vanish. The old yellow cabs and other taxi services have declined dramatically due to Uber. Almost all revenue in the taxi market goes to Uber. It's not quite a monopoly, but it's showing signs of it.
Ali S.
1. Uber’s “surge pricing” causes the cost of an Uber ride to drastically increase during times of high demand such as weekends and holidays. Even though this form of price discrimination may be seen as a bad thing, it is actually for the benefit of the consumer. In order to get more drivers on the road during times of high demand, Uber must give the drivers some form of incentive. This incentive is higher pay, with Uber drivers receiving 80% of the taxi fee. Although customers are paying more money for the service, it is unlikely most would be able to receive the service if the prices were not increased. With Uber being a luxury good, it makes sense that consumers would have to pay a luxury price tag.
2. I do not believe it is fair for politicians to restrict the amount Uber is allowed to charge because it would be affecting the Free Market. Uber has the right to make rides as expensive as they feel fit, and if these prices are in fact too expensive, the market will force them to reduce prices after people stop using Uber. Because Uber is not monopoly and customers have other transportation options other than Uber, it would be fair for Uber prices to be controlled. An argument that would be in favor of capping Uber prices is that drivers do not have a say in the prices of the rides, even though they would be willing to take less than what is being charged.
3. In the past year, the price of a license to drive a taxi has dropped from $1 million to about $690,000, causing an aggregate loss of $4 billion. This drop is forward-looking and reflects that Uber’s influence on the taxi industry is only likely to grow. Taxi ridership has also declined by 14% as a result of Uber.
Kyle E.
1) Explain Uber's "Surge Pricing." Is this form of Price Discrimination a good thing or a bad thing?
Uber’s “Surge Pricing” is increasing the price of an Uber ride when demand is high and supply is low. I believe this is a bad thing for both sides, not only does the customer have to pay more for an Uber ride, (Sometimes 2 or 3 times the average price) but the driver has no control over this price spike and thus may have to deal with an unhappy passenger over something they had no control over. Especially when Uber is heavily based on a rating system this could reflect the driver poorly and thus cause him to lose business in the future.
2) Do you think politicians should limit what Uber can charge? Explain one argument in favor of capping Uber fees.
Politicians should limit what Uber can charge, without a limit the drivers are able to charge ridiculous prices for a ride. Some drivers are even using this strategy to jack up prices so they can make a quick profit.
3) How has the expansion of Uber impacted the Taxi market?
Uber’s expansion has definitely had an impact on the Taxi market, overall it has caused a loss of roughly 4 billion dollars for the city. However; it’s difficult to pin the loss on just Uber, with programs such as the Boro Taxis and Citi Bikes there are other factors that have contributed to the loss. Not to mention Uber’s competitor, Lyft, could also be responsible.
Arsh S.
1) Uber's "surge pricing" is when Uber raises the price for a ride when the demand for a ride in a certain area and time increases. This usually happens during late hours, holidays, emergencies, rush hour, and bad weather. This form of price discrimination is good for Uber, but bad for the riders. Uber receives more money and the drivers get more pay. The consumer gets annoyed by the "surge pricing" and pays more, but has a safe,stable ride; the driver feels ashamed of the high pricing.
2) I do not believe that politicians should control Uber's pricing for rides. Government should have a limited power over businesses. If the government controls the pricing for Uber rides, then it would be unfair for Uber and other companies. If the government controls Uber pricing, then it should control pricing for other companies. One argument in favor for capping Uber's pricing is: "just because it rains outside doesn't mean you should pay $500 for a $50 ride...the yellow cabs are regulated, it only seems fair that we should regulate all the others."
3)Uber has impacted the taxi market. More people are using Uber rather than Taxi. There is competition between Uber and Taxi and with competition, companies will be looking for more ways to improving riding to get more costumers. With Uber, antitrust concerns do not have to worry about the Taxi becoming a trust. With price surging, drivers want more money and are willing to work during late hours (where the demand is high) to get more money.
Ray M.
1. Uber’s surge pricing is how during rush hour, the prices of uber rise higher than they would be during non-rush hour. It also causes the fares to rise during holidays when the demand for an uber is higher than the average day. This form of price discrimination may seem bad because it looks like Uber is taking advantage of people who desperately need an uber on a holiday or during rush hour. But, this surge pricing system just reacts to the high demand for an uber to the very low supply of drivers. It is basically a natural system. Also, it is a good thing in that of the taxi industry, because it increases competition within other taxi companies, and also lessens the restrictions that the government has on the taxi industry.
2. I think that politicians should have limitations on what Uber can charge. The reason is that the increased prices that Uber charges during high demand times may be too much for customers to buy, which hurts the customers and ultimately Uber itself. Another reason is that Uber decides the fares, the drivers do not. This leads to unrestricted fares for the drivers, when they probably would settle for better prices for the customers in the first place.
3.The expansion of Uber has impacted the Taxi market in many ways. One way is that New York City’s medallions have fallen $310,000 in the past 3 months. Uber is probably not the direct cause of this drastic decrease, but it definitely is a major cause of the drop. There is also a 14% decrease in taxi use by the general public, showing that more people are starting to lean toward Uber than a regular cab. The availability of Uber throughout the entire day overtakes its surge pricing system, also giving Uber more revenue than regular medallion cabs.
Amanda C.
1) Uber is usually cheaper than regular taxis, but on busy days like the holidays prices can surge to seven times normal fares. Prices are higher at 2am and weekends because workers don’t want to drive and those are times when people are more likely to pay more for a car than they usually would (rational behavior). Uber matches what a diver is willing to get paid with a person who is willing to pay, but the 20% Uber takes can sometimes be too much for the driver. Because of this they are getting more drivers at peak times, but they want to be paid more. Price Discrimination is a good thing for the drivers because, if they’re willing to work at a less desired time, they can get paid at much higher rates that people are willing to pay. The problem is that drivers would prefer one solid price than going to surge areas that dissipate quickly. Problems with drives is the true weakness of Uber, such as when one of the drivers would cancel rides to get surge prices, but by controlling that surge pricing this shouldn’t be an issue.
2) I think that politicians shouldn’t have a place in Uber’s business because it is Uber’s responsibility to control their prices. Airplane tickets can soar during holidays and the government doesn’t put a capping fee on that. During the holidays people are willing to spend crazy prices to go home or travel and airline companies feed on that. Uber does no different. Obviously, surging prices to the seven fold is excessive, but if that's what it takes to get drivers and people are willing to pay than I don’t see anything wrong with it. Capping Uber fees could be a good thing because it would not only make Uber more reliable, but even please some of the drivers. Many drivers feel guilty charging people hundreds of dollars to go on a trip that was normally a quarter of the price. By capping the drivers will still get an increase pay and customers will have a more reliable gage of prices.
3) Uber has caused profits from licensing for driving taxis to go from over a million dollars a month to $690,000. Taxi drivers have to endure lengthy testing and years of waiting to get licensing to drive, but with Uber all you need is a license and a car. Instead of waiting on the streets hoping a car will pass by, Uber allows a person has to just go on an app, request a car, and wait for it to show up. Uber is also familiar to people. Taxis have a connotation of being stingy and by offering an easier alternative people are willing to pay more for the convenience. Even with Uber, taxis shouldn’t be at such a loss because if a taxi is there people will go in that before requesting and waiting for an Uber. The only difference is that less people may be waiting on the sidewalks for rides, but if a taxi is there people will still use it. The real loss is the taxi drivers, who go through testing and licensing to make less money than an Uber drives and lose most of the profit to the taxi company.
John K.
1) Uber’s “Surge Pricing” is their practice of raising prices for rides when the demand is high. It simply follows the rule of supply and demand. In times where there is a large demand for drivers like rush hour, bad weather, big events or certain holidays and there isn’t a large supply of drivers, the price for a ride can be almost 3 times the original price. Uber says though that the surge prices rarely exceed 2.8 times the original price. I believe that this price discrimination is good for Uber, as a company, and its drivers however bad for the customers and publicity. The company earns extra and the drivers get a bonus but no customer is happy paying almost three times the normal price. Also, because of the surge pricing people could stop using Uber and give bad reviews about it which would decrease Uber’s demand.
2) Politicians should limit what Uber charges because it’s not fair to the people that just because it’s raining or you happen to be next to an arena when a concert finishes that you have to pay 2 or 3 times the original price. It also creates bad business because people then stop using the service and tell their friends not to use it and in the end you’re actually losing money. There should be a price surge because Uber is just following the economic practice of supply and demand but there has to be a cap because then it just becomes outrageous and the company gets bad publicity. Taxis can only charge 20 percent over their base fare and if Uber doesn’t have a limit like the taxis then the competition isn’t fair.
3) The expansion of Uber has hurt the taxi business severely. 65 percent of Uber rides have substituted for would have been taxi rides. The other 35 percent of people would have used another mode of transportation. Taxis have had a 14 percent decrease in ridership in a one year study however it had a 30 percent crash in medallion prices. It’s because even when taxis don’t have any customers they have to pay to maintain their car and their gas. People rather use their smartphones to call up a ride at home and just walk out when it gets their than wait around outside hailing a cab.
Nick P.
1. The Uber policy of surge pricing, is when prices for fares spike sharply during busy times such as weekends, holidays, late nights and many others. Uber prices are normally lower than the average cab fare, however during surge Times they can go up to seven times the normal. I believe this is a good policy. It gives drivers an incentive to drive at times when they would normally not wish to go out,such as late night and during bad weather. This creates a constant supply of drivers for the people who need rides most and are willing to pay a higher price. I think Uber has the right to charge whatever they want for their fares and if people don't want to pay such a high price they can find another ride. If this was a bad business model I believe the market would correct itself and people would cease to use uber so frequently.
2. I do not believe prices should be limited. Higher prices gives drivers incentive they need to go out during bad times. In addition, Uber has cut the base rate over the past year so higher surge prices are necessary. Some say that it is just bad business and since yellow taxis are regulated so should uber. Some deals between driver and riders cannot be made because of the 20% Uber fee. People that would be willing to pay a higher price for the overall ride mad not want to pay such a high fee. Many say that they would rather pay a higher standard rate than have to worry about prices constantly changing.
3. Uber is having a large effect on the taxi market. The price of medallions have fallen from nearly $1 million dollars in 2014 to $690,000. This is a loss of 4 billion aggregate value. Uber has also increased the number of private taxis and expanded the market in general. More taxi rides given total then in previous years. Huber is not taking so much business away from taxis as just giving rides to people who would normally use some other mode of transportation or not go out at all.
1) Surge pricing is the practice of charging more during high-volume times, I.e. New Year's Eve or Friday nights. It is good for the company, since they make more money, but it is bad for the consumer, since they lose a lot of money and may feel scammed. However, it complies to the laws of supply and demand.
2) No, they have no business setting price controls or interfering in the market. One argument in favor, however, is that it is more fair to the consumer to charge equal prices. But life ain't fair.
3) The expansion of Uber has resulted in a huge amount of losses for the NYC Yellow Cabs and all other public taxi services worldwide, sometimes resulting in massive riots.
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