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That doesn't jive with the story that Uber is providing a marketplace to connect independent drivers and passengers. Maybe Uber has dropped that way of framing
by dkarl 10y ago
That doesn't jive with the story that Uber is providing a marketplace to connect independent drivers and passengers. Maybe Uber has dropped that way of framing what it does, but that's how they used to present themselves, as a technology company enabling transactions between drivers and passengers. Under that framing, where Uber is enabling a transaction instead of participating in two transactions, this would be like an online broker that sells your stock at $15.27 per share, tells you it sold at $15.25 per share, and pockets the $0.02 per share in addition to its advertised fees for the transaction.
- jessedhillon 10y agoHow do you suppose that Uber is making any claims to you about what portion of your payment is going to the driver? I literally have no idea, when I book a ride, which dollars are going to whom. They are not like a broker in that they do not advertise performing a transaction (whose price is known) at a certain fee. If your brokerage offers to sell 100 shares at $1, with a $5 fee, you know how much of the $105 should be going to whom. Uber only tells you a single, flat price.
- notpeter 10y agoThis is actually how market makers operate. They buy/sell your stock, but the exchange also gives them a rebate on their fees. So selling your shares at $15.25 + fees (directly passed to you) but the exchange gives them a rebate of $0.02 per share. Naturally now your broker is incentivized to funnel transactions through whomever offers the best rebate, not the necessarily the best price. Source: http://www.investopedia.com/articles/active-trading/042414/what-makertaker-fees-mean-you.asp http://www.investopedia.com/articles/active-trading/042414/w...
- Dylan16807 10y agoYou're describing a completely different scenario without any deception going on.
- rbcgerard 10y agoThe question in my mind is whether uber is taking any risk in that arbitrage, if uber is essentially selling me "the rider" a swap (floating for fixed) it doesn't seem unreasonable they should be compensated for taking that risk
- dnautics 10y agothey are. If something unexpected comes up (say a high volume of traffic due to a sudden accident), then uber will have to pay the driver the higher amount.
- rbcgerard 10y agoYeah - it doesn't seem unfair to get compensated for that risk
- acjohnson55 10y agoTerminology question: wouldn't arbitrage imply absence of risk?
- rbcgerard 10y agoIf you're an academic, probably. Otherwise, almost never...
- acjohnson55 10y agoI've always kind of wondered that, because I see the word thrown around so freely as a fancy word for "opportunity", yet its textbook definition seemed a bit more nuanced.