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I believe most consumer industries have consumer surplus, since different customers are willing to pay different prices but the companies can only charge one pr
by obastani 9y ago
I believe most consumer industries have consumer surplus, since different customers are willing to pay different prices but the companies can only charge one price. This includes the taxi companies that Uber displaced. From reading the abstract, this paper does not calculate the additional consumer surplus generated by Uber beyond taxis.
Note that it doesn't follow that Uber would make more money simply by raising prices -- consumer surplus measures the amount Uber could make by charging each user their "true" value, but if Uber simply raised prices, then they would lose demand.
However, Uber is actually starting to use price discrimination (i.e., charge different users different prices based on their characteristics), which would eliminate consumer surplus [1].
[1] http://www.business-standard.com/article/companies/uber-s-new-pricing-model-charge-customers-what-they-re-willing-to-pay-117052500147_1.html http://www.business-standard.com/article/companies/uber-s-ne...