Wednesday, December 18, 2013

Uber: Mensch or Schlemiel?

This is an interesting take on Uber "surge pricing."

It is entirely possible that the policy is good economics, but bad business practice.  That is, being without a ride is something people will accept more readily than having a ride, and deciding whether or not you want to pay that price.

Note the difference:  if there aren't nearly enough rides, the price for most people is infinity:  NO. CARS. NO. RIDES.  NONE. 

So, what people want is much lower prices for the rides that they can't get.

What everyone ignores, willfully ignores, is the supply response.  I'm sitting home, watching TV.  Lots of choices on cable, none of them good, but all better than going out in a snow storm and driving in Manhattan.  Do I go out?

Only if I expect to make enough money to encourage me to incur the risk, and the discomfort.  The high price increases the number of rides available.  How high "should" the price be?  I have no clue.  High enough to reduce the price from infinity, which is what people people who fetishize price gouging seem to prefer.

In their imaginary world, they go out to the curb, it's snowing hard, and they wave.  A cab appears, and they get the same fare as if it were Sunday morning at 6 am and sunny.

It just doesn't make any sense.  But as the article notes, consumers HATE having the option to take an expensive ride.  They hate it much more than having no ride.  Is Uber obliged to validate this lunacy, to stay in business?

The fact that "price surge" is against the law is not really relevant.  New York has been conducting "legal" but immoral stop and searches for the crime of "walking while brown" for years.  So don't give me "illegal."  Bah, humbug!

1 comment:

  1. Not everyone has ignored the supply response:


Do you have suggestions on where we could find more examples of this phenomenon?