4 ms·

"Uber's business only works at scale, therefore they need to get there and deep discounts to get to scale make sense regardless of competitors." Isn't that alm

"Uber's business only works at scale, therefore they need to get there and deep discounts to get to scale make sense regardless of competitors." Isn't that almost universally true for everything? Is it an acceptable reason to stifle open market competition? I mean think about any other industry. Say a new airline wants to get into business. Is it okay for them to offer $1 tickets (while writing off taxes/airport fees as losses) until they gain enough market share? What would that do to other competitors in that industry?

dismantlethesun 10y ago
Not really. "Only works at [large] scale" means that you cannot be profitable and be a small business. As over 70% of business transactions in the US are done by small businesses, then most businesses can profitably exist at a small scale. When something is only profitable at large scale, typically what's done in the western-style economic nations is to (a) make a public company like the US Post Office (b) tightly regulate the market so the inevitable large actors has to serve the public good as is done for insurance currently or (c) hand out monopolies at the local level as is done for telecom companies.
icebraining 10y ago
Is it okay for them to offer $1 tickets until they gain enough market share? No "until", the point is that they would offer $1 tickets forever, it's just that they would only lose money while they scaled. So competitors would still be screwed even after the "dumping" part. And in a sense, isn't any new business temporarily "dumping" its products? If you're a solo founder writing and selling a SaaS product for $20/month, your income won't pay for the costs (e.g. your salary) until you get enough customers. Is that dumping? What if the competitors' products all cost $1000/month?

4 ms·

"Uber's business only works at scale, therefore they need to get there and deep discounts to get to scale make sense regardless of competitors." Isn't that alm

by reacharavindh 10y ago

dismantlethesun 10y ago
Not really. "Only works at [large] scale" means that you cannot be profitable and be a small business. As over 70% of business transactions in the US are done by small businesses, then most businesses can profitably exist at a small scale. When something is only profitable at large scale, typically what's done in the western-style economic nations is to (a) make a public company like the US Post Office (b) tightly regulate the market so the inevitable large actors has to serve the public good as is done for insurance currently or (c) hand out monopolies at the local level as is done for telecom companies.
icebraining 10y ago
Is it okay for them to offer $1 tickets until they gain enough market share? No "until", the point is that they would offer $1 tickets forever, it's just that they would only lose money while they scaled. So competitors would still be screwed even after the "dumping" part. And in a sense, isn't any new business temporarily "dumping" its products? If you're a solo founder writing and selling a SaaS product for $20/month, your income won't pay for the costs (e.g. your salary) until you get enough customers. Is that dumping? What if the competitors' products all cost $1000/month?