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I guess I don't see how liquidity effect and network effect are different here. If there aren't enough riders then there aren't enough drivers. If there aren't

I guess I don't see how liquidity effect and network effect are different here. If there aren't enough riders then there aren't enough drivers. If there aren't enough drivers then pickup times are too high and the service dies. It really comes down to how important pickup times are.

bryanlarsen 11y ago
The ultimate test for a monopoly is if the monopolist could raise prices significantly and not lose significant business to competitors. I don't think Uber could pass that test.
- askafriend 11y ago
  If you can get rides with Uber instantly versus waiting 20-30mins with the competition, then Uber can raise prices a bit and not lose many customers. People are impatient and Uber has already trained a vast audience that you click a button and get a car in 10mins or less. Once you get used to it, you won't settle for an inferior network where you have to wait 2x or 3x for a couple bucks less.
  - mosquito242 11y ago
    I think the keyword is significantly. If Uber tripled or quadrupled their prices, I think they'd be fairly vulnerable to regional competitors. Even an increase of 1.5x seems like it'd be hard to pull off. Speaking anecdotally, I know for sure that I'd use a cheaper alternative to save $5 even if it took an extra 10 min.
    - arockwell 11y ago
      Lyft Line recently added this option. You can wait 10 extra minutes to save a few dollars.
  - steven2012 11y ago
    Uber keeps dropping their prices, not raising them.
    - askafriend 11y ago
      It depends on the market you're in. Every market has different economics due to population, density, city layout, socioeconomic landscape, etc. In many cities Uber is losing money, but in many others they are doing very well. They probably adjust prices to optimize for growth in the cities where they're trying to gain traction. In established cities (as in SF), they tend to raise prices slowly.

bryanlarsen 11y ago

The ultimate test for a monopoly is if the monopolist could raise prices significantly and not lose significant business to competitors. I don't think Uber could pass that test.

askafriend 11y ago
If you can get rides with Uber instantly versus waiting 20-30mins with the competition, then Uber can raise prices a bit and not lose many customers. People are impatient and Uber has already trained a vast audience that you click a button and get a car in 10mins or less. Once you get used to it, you won't settle for an inferior network where you have to wait 2x or 3x for a couple bucks less.
- mosquito242 11y ago
  I think the keyword is significantly. If Uber tripled or quadrupled their prices, I think they'd be fairly vulnerable to regional competitors. Even an increase of 1.5x seems like it'd be hard to pull off. Speaking anecdotally, I know for sure that I'd use a cheaper alternative to save $5 even if it took an extra 10 min.
  - arockwell 11y ago
    Lyft Line recently added this option. You can wait 10 extra minutes to save a few dollars.
- steven2012 11y ago
  Uber keeps dropping their prices, not raising them.
  - askafriend 11y ago
    It depends on the market you're in. Every market has different economics due to population, density, city layout, socioeconomic landscape, etc. In many cities Uber is losing money, but in many others they are doing very well. They probably adjust prices to optimize for growth in the cities where they're trying to gain traction. In established cities (as in SF), they tend to raise prices slowly.