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I have trouble seeing how this is supposed to work. In the short run, my willingness to pay Uber is roughly "whatever Lyft is charging for the same route." In

I have trouble seeing how this is supposed to work. In the short run, my willingness to pay Uber is roughly "whatever Lyft is charging for the same route." In the long run, if Uber and Lyft somehow collude to increase prices a lot, I buy another car and use both services much less. My short-run behavior won't tell them where this threshold lies, and once it has happened it is too late for them to get my business back for a few years. Price discrimination works if you have real market power, or if marginal and average costs are hugely different (see: airlines, software). Uber's business doesn't seem to resemble either situation.

HenryBemis 9y ago
I believe Uber's tactic is to be the "last man standing". This seems to be a money pit, and the ones who fund it continuously know about it. It's a game of patience. When taxis will be nullified, and competition will have ran out of money, then and only then they will be the crowned. A Pyrrhic victory if you may. As for the ethics of Uber, it is like the $1 billion in my bank account. It doesn't exist :)
- voidmain 9y ago
  Even a hypothetical taxi monopoly faces close substitutes: owning a car for locals, renting a car for travelers. I still don't see that much room for price discrimination. The "Standard oil strategy" of losing money to drive your competitors out of business doesn't really seem to work. If Uber declares victory and jacks up prices, presumably they will have a dozen new competitors the next week. How long did it take substitutes to pop up when Uber and Lyft left Austin? What an actually evil Uber does at this stage is climb into bed with the regulators, suggesting all kinds of new regulations to kick the ladder down behind them. Uber doesn't seem to be going down that route so far.
- green_rover 9y ago
  It's every company's goal to be the "last man standing". In this case though, the other "men" on the playing field includes car ownership. Even absent Lyft, taxis and other competitors, the big prize isn't winning the current market for livery services. No, the big prize is winning the market for transportation. To win that market, Uber needs to be faster, cheaper and better than Lyft, taxis, public transportation, car rentals and car ownership. If they succeed, consumers win.
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HenryBemis 9y ago

I believe Uber's tactic is to be the "last man standing". This seems to be a money pit, and the ones who fund it continuously know about it. It's a game of patience. When taxis will be nullified, and competition will have ran out of money, then and only then they will be the crowned. A Pyrrhic victory if you may. As for the ethics of Uber, it is like the $1 billion in my bank account. It doesn't exist :)

voidmain 9y ago
Even a hypothetical taxi monopoly faces close substitutes: owning a car for locals, renting a car for travelers. I still don't see that much room for price discrimination. The "Standard oil strategy" of losing money to drive your competitors out of business doesn't really seem to work. If Uber declares victory and jacks up prices, presumably they will have a dozen new competitors the next week. How long did it take substitutes to pop up when Uber and Lyft left Austin? What an actually evil Uber does at this stage is climb into bed with the regulators, suggesting all kinds of new regulations to kick the ladder down behind them. Uber doesn't seem to be going down that route so far.
green_rover 9y ago
It's every company's goal to be the "last man standing". In this case though, the other "men" on the playing field includes car ownership. Even absent Lyft, taxis and other competitors, the big prize isn't winning the current market for livery services. No, the big prize is winning the market for transportation. To win that market, Uber needs to be faster, cheaper and better than Lyft, taxis, public transportation, car rentals and car ownership. If they succeed, consumers win.

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