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Ok? That makes perfect sense. They're not a charity. People like to use this as an excuse to attack capitalism in general, a la "if corporations didn't run thi

by wyager 9y ago

Ok? That makes perfect sense. They're not a charity. People like to use this as an excuse to attack capitalism in general, a la "if corporations didn't run things, we would charge as little as possible instead of as much as possible". However, this is entirely missing the point; it's critically important that businesses charge as much as they can get away with. Why? Because prices are how market information is communicated, and high profit margins indicate an imbalance between supply and demand. If Uber charged the bare minimum they could get away with and still survive, there would be no incentive for competitors to come in and attempt to undercut them, leaving the supply/demand mismatch as it is. In a zero-overhead idealized market, competitors would keep coming in until profit margins were within epsilon of zero; obviously we can't do exactly that in real life, but we want to get as close to that as possible.

yorwba 9y ago
> If Uber charged the bare minimum they could get away with and still survive, there would be no incentive for competitors to come in and attempt to undercut them, leaving the supply/demand mismatch as it is. Why? If supply/demand is mismatched in such a way that a competitor is necessary, then some potential Uber customers are not being served. Then either the customer can't even afford the minimal price, in which case competition doesn't help, or Uber's service is unavailable for some reason, which provides incentive for a competitor to come in and capture the market segment. It is not absolutely necessary that everyone charge as much as they can; it just happens to be the case that money tends to be controlled by people who would like increase its amount. In the hypothetical case of Uber turning into a charity that charges as little as possible, the price would simply include the market information that someone is willing to use their money to subsidize everyone's fares.
algesten 9y ago
An argument that only works if it is possible to compete. Most "markets" seem to consolidate into monopolies at the same time as entry to that market is tightly controlled. Telco/Airlines/ISP/Music etc. Uber has different situations in different places, but to me it seems that they only have real competition in some cities in the US.

by wyager 9y ago

yorwba 9y ago

> If Uber charged the bare minimum they could get away with and still survive, there would be no incentive for competitors to come in and attempt to undercut them, leaving the supply/demand mismatch as it is. Why? If supply/demand is mismatched in such a way that a competitor is necessary, then some potential Uber customers are not being served. Then either the customer can't even afford the minimal price, in which case competition doesn't help, or Uber's service is unavailable for some reason, which provides incentive for a competitor to come in and capture the market segment. It is not absolutely necessary that everyone charge as much as they can; it just happens to be the case that money tends to be controlled by people who would like increase its amount. In the hypothetical case of Uber turning into a charity that charges as little as possible, the price would simply include the market information that someone is willing to use their money to subsidize everyone's fares.

algesten 9y ago

An argument that only works if it is possible to compete. Most "markets" seem to consolidate into monopolies at the same time as entry to that market is tightly controlled. Telco/Airlines/ISP/Music etc. Uber has different situations in different places, but to me it seems that they only have real competition in some cities in the US.