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> "Would the monopoly plan really work?" IMO no. Others mention the network effect, and while it will certainly be a factor, I don't think it will be anywhere
by potatolicious 10y ago
> "Would the monopoly plan really work?"
IMO no. Others mention the network effect, and while it will certainly be a factor, I don't think it will be anywhere near strong enough to make the monopoly plan work.
The network effect for Uber is really local - at the city level. An "Uber, but only in Austin" service can easily compete with a national-level Uber, since the vast majority of cab rides are taken within a user's home city.
You need a critical mass of cars/drivers to present real competition in this space, but you don't need to do it at national, or even state-level scale. A small upstart that can achieve critical mass in a single city can present real threat to Uber in that city.
The network effect of cabs between cities is so little that while a lot of consolidation of cab companies have occurred in each city, until Uber there was never a major cross-city network. I'm not convinced that a unified worldwide fleet has a significant competitive advantage. It'd be useful for tourists, maybe.
And this is already happening - Juno here in NYC is gaining real traction by charging drivers less, getting drivers to evangelize to each other. Uber won't be toppled by Lyft or any other megalithic ride hailing company, it will more likely be toppled by hundreds of smaller, geographically narrow companies.
- Guest98123 10y agoI think Uber has a huge advantage. If you start a new transportation service in NYC, Uber can just flip a switch, undercut your NYC prices by $2 per ride, and make up the difference by raising prices $0.10 per ride in other cities without competition. How do you compete with that? You'd be burning money to compete, and Uber would just wait it out until you're bankrupt. If you launch a global competitor that gains traction, Uber would just lower prices worldwide. If they can sustain a billion dollar loss every quarter, then you're quickly going out of business, and once that happens, they'd raise prices again and return to be profitable.
- majani 10y agoChina was the ultimate test of your theory and Uber didn't pass
- enraged_camel 10y ago>>The network effect for Uber is really local - at the city level. An "Uber, but only in Austin" service can easily compete with a national-level Uber Not really. Uber customers only pay 41% of the cost of their rides. The rest is subsidized by Uber's investors. This is what allows them to compete with (read: severely undercut) taxi companies. Local ridesharing won't have this massive advantage.