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> 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 t

by 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
From my perspective you're responding to very specific issues I've raised with hand waving. Can you give precise examples of how, again precisely, a new entrant in vehicle based taxis supposed to offer lower costs in any specific and objective way that the newer competitor would be unable to immediately match and overcome with scale?
- CPLX 9y ago
  We already have taxi services. They changed pretty sharply in recent years due to the advent of smartphone ride hailing. That was a somewhat big deal and led to some consolidation. But it still hasn't created monopolies and doesn't look likely to. I don't have to prove anything, we already have a taxi sector and it has attributes. Burden of proof is on the people claiming that self-driving will create a winner take all market when there's neither any evidence nor a plausible mechanism by which such a thing would happen. If we replaced airline pilots with robots would that change the basic premise of the airline business? What about bus drivers? Why? OK now why taxis? All the things you're talking about like economies of scale and similar are applicable to taxis with people driving them. What about replacing drivers with a machine will change the network effects of the taxi business? Answer: nothing. The two concepts are orthogonal. The premise that self-driving inevitably leads to an all powerful global taxi monopoly is magical thinking, and I really am mystified that it has such traction here.
  - indubitable 9y ago
    Do you think that your post is a reasonable to a simple request asking for any sort of logic to support your assertions? So far as I can tell, your argument seems to be a poorly elaborated upon appeal to taxis. Even giving you the benefit of the doubt there, I don't see how this makes sense. Removing the driver is a revolutionary shift in how the entire industry operates. It also completely shifts the margins for competition, and innovation. The vast majority of cost in a taxi is the human in it. That means that in order for taxi companies the most effective means of competition on fare pricing is seeing who can pay their drivers less. Shaving 10% off your operating cost due to scale is irrelevant when the human in the seat is 95% of your cost. Taxis in most areas are monopolized (making your choice of them as a foundation of your view even more perplexing), but Las Vegas is an exception there. There are a large amount of competitors and the net result of that was that taxi drivers just finally won a years long court case demanding they be paid at least minimum wage. That's quite silly, and sad. And something that a decade from now will be a relic of the past.
    - CPLX 9y ago
      I don't care about taxis that much. But I do have a degree in economics and actually wrote a thesis, in part, on technological lock-in and naturally occurring monopolies. Most things don't become monopolies, so the burden of proof goes the other way. And there's nothing about self-driving taxis that makes them a monopoly. For the most part a natural technological lock-in has an insurmountable network effect, the canonical example is the design of the typewriter keyboard. In all contexts what happens is an environment where your decision to use a product makes it more valuable for all other users. Like a fax machine. Or Facebook. Taxis are literally the opposite of this. The more people using a taxi service the longer I have to wait for a cab. Yes, you will quickly point out that the bigger the service the more that service be available wherever I tend to go. But those two forces are in direct contradiction to each other and as such the network effects of taxi services are weak at best. Sure you can create a hypothetical world monopoly autonomous taxi company. I can always create another company, buy a dozen self-driving taxis, and post them outside giant sporting events or clubs at closing time with graphics on the side saying download this app to rent me, and someone will do it. There goes your monopoly. The whole freaking point of monopolies is that they happen when the switching costs are extremely high or when the supply is constrained and someone corners it. Switching costs will always be zero, and there's absolutely no chance whatsoever that one single company will permanently be the only one that creates a working autonomous vehicle. So as neither of those conditions apply, there's no obvious force towards a permanent monopoly. In fact the reason for the government created monopolies we do see is the fact that the market tends toward commoditization and a downward spiral in prices. The market for taxi services is unusually competitive. That's why we got to where we are in the first place.

by CPLX 9y ago

indubitable 9y ago

From my perspective you're responding to very specific issues I've raised with hand waving. Can you give precise examples of how, again precisely, a new entrant in vehicle based taxis supposed to offer lower costs in any specific and objective way that the newer competitor would be unable to immediately match and overcome with scale?

CPLX 9y ago
We already have taxi services. They changed pretty sharply in recent years due to the advent of smartphone ride hailing. That was a somewhat big deal and led to some consolidation. But it still hasn't created monopolies and doesn't look likely to. I don't have to prove anything, we already have a taxi sector and it has attributes. Burden of proof is on the people claiming that self-driving will create a winner take all market when there's neither any evidence nor a plausible mechanism by which such a thing would happen. If we replaced airline pilots with robots would that change the basic premise of the airline business? What about bus drivers? Why? OK now why taxis? All the things you're talking about like economies of scale and similar are applicable to taxis with people driving them. What about replacing drivers with a machine will change the network effects of the taxi business? Answer: nothing. The two concepts are orthogonal. The premise that self-driving inevitably leads to an all powerful global taxi monopoly is magical thinking, and I really am mystified that it has such traction here.
- indubitable 9y ago
  Do you think that your post is a reasonable to a simple request asking for any sort of logic to support your assertions? So far as I can tell, your argument seems to be a poorly elaborated upon appeal to taxis. Even giving you the benefit of the doubt there, I don't see how this makes sense. Removing the driver is a revolutionary shift in how the entire industry operates. It also completely shifts the margins for competition, and innovation. The vast majority of cost in a taxi is the human in it. That means that in order for taxi companies the most effective means of competition on fare pricing is seeing who can pay their drivers less. Shaving 10% off your operating cost due to scale is irrelevant when the human in the seat is 95% of your cost. Taxis in most areas are monopolized (making your choice of them as a foundation of your view even more perplexing), but Las Vegas is an exception there. There are a large amount of competitors and the net result of that was that taxi drivers just finally won a years long court case demanding they be paid at least minimum wage. That's quite silly, and sad. And something that a decade from now will be a relic of the past.
  - CPLX 9y ago
    I don't care about taxis that much. But I do have a degree in economics and actually wrote a thesis, in part, on technological lock-in and naturally occurring monopolies. Most things don't become monopolies, so the burden of proof goes the other way. And there's nothing about self-driving taxis that makes them a monopoly. For the most part a natural technological lock-in has an insurmountable network effect, the canonical example is the design of the typewriter keyboard. In all contexts what happens is an environment where your decision to use a product makes it more valuable for all other users. Like a fax machine. Or Facebook. Taxis are literally the opposite of this. The more people using a taxi service the longer I have to wait for a cab. Yes, you will quickly point out that the bigger the service the more that service be available wherever I tend to go. But those two forces are in direct contradiction to each other and as such the network effects of taxi services are weak at best. Sure you can create a hypothetical world monopoly autonomous taxi company. I can always create another company, buy a dozen self-driving taxis, and post them outside giant sporting events or clubs at closing time with graphics on the side saying download this app to rent me, and someone will do it. There goes your monopoly. The whole freaking point of monopolies is that they happen when the switching costs are extremely high or when the supply is constrained and someone corners it. Switching costs will always be zero, and there's absolutely no chance whatsoever that one single company will permanently be the only one that creates a working autonomous vehicle. So as neither of those conditions apply, there's no obvious force towards a permanent monopoly. In fact the reason for the government created monopolies we do see is the fact that the market tends toward commoditization and a downward spiral in prices. The market for taxi services is unusually competitive. That's why we got to where we are in the first place.