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But the problem with Uber is not that sellers are listing too high, it's that Uber keeps jacking up the spread. This is not a true functioning marketplace beca

But the problem with Uber is not that sellers are listing too high, it's that Uber keeps jacking up the spread. This is not a true functioning marketplace because the buyers and sellers don't have good information. Only the market maker itself has all the information. Also it isn't really true that Uber lowers prices for riders when they lower prices for drivers. Uber practices active price discrimination to discover the highest price a rider will pay. If you get ten people together on the same street corner and everyone calls for an UberX, you'll get ten different prices.

skybrian 10y ago
Serious question: how do you know Uber's spread is increasing? I'm not even sure if it's positive or negative, given that they subsidize markets (running a loss) sometimes.
- honkhonkpants 10y ago
  Again it's hard to tell because only Uber knows. Prices for UberX have gone up a lot in San Francisco. The minimum fare went from $5 to $6.55 in the space of only four months leading March 2016, and the service fee went from $1 to $1.55 in the same time. Meanwhile the drivers keep complaining their rates are going down, so I have to conclude that Uber's share increases.
- rajacombinator 10y ago
  Ask your drivers. I know if SF and Vegas they will all complain about how Uber increased their take. (Around the same time we saw a lot of articles about "unit economics" at startups.)
harryh 10y ago
> Uber practices active price discrimination to discover the highest price a rider will pay Wait really? Has this been written about? That would be very interesting!
morgante 10y ago
> If you get ten people together on the same street corner and everyone calls for an UberX, you'll get ten different prices. That would be a huge story and would be much more interesting than the typical Uber hit job. If it were true, I have to imagine that it would have been covered by a journalist intent on attacking Uber. Care to share some actual evidence?
- tux1968 10y ago
  Wouldn't it be simple to claim that more demand (for any given corner or area) is immediately reflected in the price? That doesn't sound like a scandal; it's harder to arrange for 10 cars to arrive at a spot than 1.
  - morgante 10y ago
    I don't think the Uber surge threshold is so sensitive that you're likely to be the marginal customer driving pricing up. More importantly, there's simply no way that you would have 10 different prices. Ten people on a corner might be enough to flip that area into surge pricing, but each individual would not get their own personal price. It's not like this is something which is untestable. If people actually think Uber is discriminating on price between different users, that's trivial to test.
    - honkhonkpants 10y ago
      It's the surge multipliers that I am talking about and yes it is trivial to test. During surge I've been with friends all of whom get different multipliers. Outside of surge everyone pays a published rate.
  - tripzilch 10y ago
    > Wouldn't it be simple to claim that more demand (for any given corner or area) is immediately reflected in the price? That doesn't sound like a scandal; Absolutely not. This is why price-discrimination always happens jumping through a weird hoop or other. Imagine the typical example of price discrimination, S/M/L coffee for widely spread prices that don't have much to do with the cost for the amount of coffee with prices that wildly change up and down depending how busy it is, customers would be rightly pissed for getting screwed because they're obviously not getting a fair price. Price differentiation needs some sort of trick to obscure this fact. Otherwise it's like saying "getting away with this is perfectly fine because capitalism", which is motivated purely by greed, not the possible benefits of a free market. > it's harder to arrange for 10 cars to arrive at a spot than 1. I think you forgot to divide by ten, there. Try this statement for a fairer comparison: to arrange for 10 cars to arrive at 1 spot vs 10 cars at 10 spots Seems to me that the 10 cars at 1 spot should be cheaper. The only reason they get away with this price differentiation going the other way is because they are able to hide these prices from the customers. Driving up profits from unequal information availability is also known as "screwing people over", so yeah that'd be a scandal (except for all the HNers that will go "I am genuinely curious why this is so *surprising" to anyone" -- because getting screwed should be a surprise, otherwise you should've gotten mad sooner, like when we said there's no proof of getting screwed)

skybrian 10y ago

Serious question: how do you know Uber's spread is increasing? I'm not even sure if it's positive or negative, given that they subsidize markets (running a loss) sometimes.

honkhonkpants 10y ago
Again it's hard to tell because only Uber knows. Prices for UberX have gone up a lot in San Francisco. The minimum fare went from $5 to $6.55 in the space of only four months leading March 2016, and the service fee went from $1 to $1.55 in the same time. Meanwhile the drivers keep complaining their rates are going down, so I have to conclude that Uber's share increases.
rajacombinator 10y ago
Ask your drivers. I know if SF and Vegas they will all complain about how Uber increased their take. (Around the same time we saw a lot of articles about "unit economics" at startups.)

harryh 10y ago

> Uber practices active price discrimination to discover the highest price a rider will pay Wait really? Has this been written about? That would be very interesting!

morgante 10y ago

> If you get ten people together on the same street corner and everyone calls for an UberX, you'll get ten different prices. That would be a huge story and would be much more interesting than the typical Uber hit job. If it were true, I have to imagine that it would have been covered by a journalist intent on attacking Uber. Care to share some actual evidence?

tux1968 10y ago
Wouldn't it be simple to claim that more demand (for any given corner or area) is immediately reflected in the price? That doesn't sound like a scandal; it's harder to arrange for 10 cars to arrive at a spot than 1.
- morgante 10y ago
  I don't think the Uber surge threshold is so sensitive that you're likely to be the marginal customer driving pricing up. More importantly, there's simply no way that you would have 10 different prices. Ten people on a corner might be enough to flip that area into surge pricing, but each individual would not get their own personal price. It's not like this is something which is untestable. If people actually think Uber is discriminating on price between different users, that's trivial to test.
  - honkhonkpants 10y ago
    It's the surge multipliers that I am talking about and yes it is trivial to test. During surge I've been with friends all of whom get different multipliers. Outside of surge everyone pays a published rate.
- tripzilch 10y ago
  > Wouldn't it be simple to claim that more demand (for any given corner or area) is immediately reflected in the price? That doesn't sound like a scandal; Absolutely not. This is why price-discrimination always happens jumping through a weird hoop or other. Imagine the typical example of price discrimination, S/M/L coffee for widely spread prices that don't have much to do with the cost for the amount of coffee with prices that wildly change up and down depending how busy it is, customers would be rightly pissed for getting screwed because they're obviously not getting a fair price. Price differentiation needs some sort of trick to obscure this fact. Otherwise it's like saying "getting away with this is perfectly fine because capitalism", which is motivated purely by greed, not the possible benefits of a free market. > it's harder to arrange for 10 cars to arrive at a spot than 1. I think you forgot to divide by ten, there. Try this statement for a fairer comparison: to arrange for 10 cars to arrive at 1 spot vs 10 cars at 10 spots Seems to me that the 10 cars at 1 spot should be cheaper. The only reason they get away with this price differentiation going the other way is because they are able to hide these prices from the customers. Driving up profits from unequal information availability is also known as "screwing people over", so yeah that'd be a scandal (except for all the HNers that will go "I am genuinely curious why this is so *surprising" to anyone" -- because getting screwed should be a surprise, otherwise you should've gotten mad sooner, like when we said there's no proof of getting screwed)