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Taxis are a typical market of critical mass. The bigger a company gets, the better its product inherently gets. This tends to be something that leads to monopol

Taxis are a typical market of critical mass. The bigger a company gets, the better its product inherently gets. This tends to be something that leads to monopolization. Taxi transportation was (and is) already a monopoly in many areas. And in that case they're mostly obtaining their monopoly just based on the critical mass aspect since the real benefits of an economy of scale is reduced when you have a human in the car as the price floor far higher than just the maintenance cost of the car. And that floor is also regionally dependent. With self driving taxis there no technical reason that taxis in San Francisco couldn't cost the same as taxis in places with reasonable living expenses, at least so long as things like basic maintenance could also be reasonably automated to similarly remove humans from the picture. And finally it will be incredibly difficult to convince consumers to swap to another brand. One taxi is, more or less, the same as another. When one works well, has an overwhelming critical mass, and offers fair prices - where is a new company supposed to compete? Also there will be minimal need to pick and choose markets, at least not in the scale you're implying. I think most of these imminent monopoly factors are going to be self evident to investors. That's going to drive absurd investment enabling companies to deploy in mass. The bottle neck will likely be how fast cars can be produced which is likely why we're seeing riding sharing come autonomous taxi companies currently partnering with vehicle manufacturers. And I've yet to touch on the final issue (though I'm sure I'm neglecting others) and that can be stated simply as what it is - mergers and acquisitions.

CPLX 9y ago
> And finally it will be incredibly difficult to convince consumers to swap to another brand. One taxi is, more or less, the same as another. That's not how any of this works. What you're saying is the opposite of obvious economic theory. It's a pretty fundamental concept that when products are commoditized people will switch to save fractions of a cent or because they're bored, or because the logo is a different color. The only counter to this is if there are strong netowrk effects but taxis only have weak network effects for availability only.
- indubitable 9y ago
  Right, people will be driven primarily by cost. And the larger an automated taxi service is, the cheaper than offer their product - which prices that not only approach but go below the price of private ownership. And the largest players will be able to setup extensive maintenance/cleaning and other facilities ensuring that what difference does exist in quality of rides is also in their favor. This is something that companies without the same scale will be unable to compete against. And you cannot marginalize the issue of availability and response time. In a world of ubiquitous taxis, it's reasonable to expect that the average response time could begin to approach measurement in seconds. Once again that's exclusively a product of scale.
  - CPLX 9y ago
    > And the larger an automated taxi service is, the cheaper than offer their product Incorrect. As I mentioned there will be some aspects of the taxi business that will be more profitable than others. New entrants focusing only on those areas and routes with higher margins will be able to join anytime, and will. Some parts of the business will be more expensive than others (think rural vs. urban or corporate accounts vs. leisure travel) and some companies will optimize for them and thus be able to create pricing pressure. You see this already with other transportation options that have high capital costs and availability network effects. Think airlines. The tendency in markets like this is for prices to be driven down to marginal cost. But regardless of all this theorizing, it's much simpler to analyze, we can just look at the taxi business today. The addition of autonomy really just doesn't change the fundamental economics of the thing much at all. People cost money to hire. Machines cost money to buy and maintain. The cost structures are different but they don't have really any effect on the network effect aspect of things. Because of the app based model and some economies of scale it's likely we'll see a bunch of national/global app based taxi hailing companies, a shift which has already for the most part happened over the last few years. Nobody in this thread has offered up any convincing argument at all for why the simple addition of autonomy really will change this dynamic at all.
    - indubitable 9y ago

CPLX 9y ago

> And finally it will be incredibly difficult to convince consumers to swap to another brand. One taxi is, more or less, the same as another. That's not how any of this works. What you're saying is the opposite of obvious economic theory. It's a pretty fundamental concept that when products are commoditized people will switch to save fractions of a cent or because they're bored, or because the logo is a different color. The only counter to this is if there are strong netowrk effects but taxis only have weak network effects for availability only.

indubitable 9y ago
Right, people will be driven primarily by cost. And the larger an automated taxi service is, the cheaper than offer their product - which prices that not only approach but go below the price of private ownership. And the largest players will be able to setup extensive maintenance/cleaning and other facilities ensuring that what difference does exist in quality of rides is also in their favor. This is something that companies without the same scale will be unable to compete against. And you cannot marginalize the issue of availability and response time. In a world of ubiquitous taxis, it's reasonable to expect that the average response time could begin to approach measurement in seconds. Once again that's exclusively a product of scale.
- CPLX 9y ago
  > And the larger an automated taxi service is, the cheaper than offer their product Incorrect. As I mentioned there will be some aspects of the taxi business that will be more profitable than others. New entrants focusing only on those areas and routes with higher margins will be able to join anytime, and will. Some parts of the business will be more expensive than others (think rural vs. urban or corporate accounts vs. leisure travel) and some companies will optimize for them and thus be able to create pricing pressure. You see this already with other transportation options that have high capital costs and availability network effects. Think airlines. The tendency in markets like this is for prices to be driven down to marginal cost. But regardless of all this theorizing, it's much simpler to analyze, we can just look at the taxi business today. The addition of autonomy really just doesn't change the fundamental economics of the thing much at all. People cost money to hire. Machines cost money to buy and maintain. The cost structures are different but they don't have really any effect on the network effect aspect of things. Because of the app based model and some economies of scale it's likely we'll see a bunch of national/global app based taxi hailing companies, a shift which has already for the most part happened over the last few years. Nobody in this thread has offered up any convincing argument at all for why the simple addition of autonomy really will change this dynamic at all.
  - indubitable 9y ago