4 ms·

If Uber raises prices, they immediately lose customers to Lyft. It was always a race to the bottom and I don’t see why it would be any different now.

dougmwne 8y ago
Why wouldn't both Uber and Lift simultaneously raise their prices by a few percent? Once they're both public and the VC cash injections dry up they'll both need to raise prices if they don't want to be out of business. Coke and Pepsi don't sell at a loss to try to steal each other's market share. What would cause these two public companies to run themselves into the ground if the market could absorb a 7% price increase? I don't actually like Uber that much as a brand, and I understand that the HN groupthink is against them, but I'm not clear on why everyone seems think this is such a terrible business. Are people really going to go back to taking cabs? I predict that Uber and Lyft will both see big drops in stock price, especially as we enter the next recession. If one or both of the companies survive the downturn, they will turn into leaner, healthy bluechip stocks that turn a stable profit, at least until the flying, self-driving, solar-powered scooters take over. IMHO anyway.
- raphaelj 8y ago
  Because that's market collusion, and that is illegal.
  - alaties 8y ago
    Collusion is when the parties coordinate on the price increases. If they both increase prices independently to achieve profitability, then I don't believe that to be illegal.
    - jacques_chester 8y ago
      Even if they didn't collude, they'd be under suspicion of it. Depending on how DOJ wind blows, that could be a big and expensive distraction.
      - Centaur1989 8y ago
        No. That's not how price collusion works. If Delta airlines started charging for 2nd baggage, and after their announcement United/American/Southwest follow suit, that's not a price collusion if it wasn't predetermined secretly through implicit and explicit signaling among the airlines. The other airlines had option of either increasing their margins by adding new fee, or keeping 2nd bag free and hoping to make more money with increased volume (profit = unit margin volume). They are free to choose former or latter in our capitalistic setup. If there aren't any easily available substitutes, and you don't expect some new entrant to come and distrupt you, first option becomes much more lucrative. Especially if you have negative unit margins, since with second option - negative marginshigher volumes = lots of losses
        jacques_chester 8y ago
        > If Delta airlines started charging for 2nd baggage, and after their announcement United/American/Southwest follow suit, that's not a price collusion if it wasn't predetermined secretly through implicit and explicit signaling among the airlines. I understand that. That's why I said "suspicion". Something that seems too convenient and warrants some more poking and prodding and surveillance. It's not as though folks colluding walk around waving "I am colluding, please investigate further" placards.
smallgovt 8y ago
Now there is a well-defined valuation at which Uber can just outright purchase Lyft. $20B and going down.

dougmwne 8y ago

Why wouldn't both Uber and Lift simultaneously raise their prices by a few percent? Once they're both public and the VC cash injections dry up they'll both need to raise prices if they don't want to be out of business. Coke and Pepsi don't sell at a loss to try to steal each other's market share. What would cause these two public companies to run themselves into the ground if the market could absorb a 7% price increase? I don't actually like Uber that much as a brand, and I understand that the HN groupthink is against them, but I'm not clear on why everyone seems think this is such a terrible business. Are people really going to go back to taking cabs? I predict that Uber and Lyft will both see big drops in stock price, especially as we enter the next recession. If one or both of the companies survive the downturn, they will turn into leaner, healthy bluechip stocks that turn a stable profit, at least until the flying, self-driving, solar-powered scooters take over. IMHO anyway.

raphaelj 8y ago
Because that's market collusion, and that is illegal.
- alaties 8y ago
  Collusion is when the parties coordinate on the price increases. If they both increase prices independently to achieve profitability, then I don't believe that to be illegal.
  - jacques_chester 8y ago
    Even if they didn't collude, they'd be under suspicion of it. Depending on how DOJ wind blows, that could be a big and expensive distraction.
    - Centaur1989 8y ago
      No. That's not how price collusion works. If Delta airlines started charging for 2nd baggage, and after their announcement United/American/Southwest follow suit, that's not a price collusion if it wasn't predetermined secretly through implicit and explicit signaling among the airlines. The other airlines had option of either increasing their margins by adding new fee, or keeping 2nd bag free and hoping to make more money with increased volume (profit = unit margin volume). They are free to choose former or latter in our capitalistic setup. If there aren't any easily available substitutes, and you don't expect some new entrant to come and distrupt you, first option becomes much more lucrative. Especially if you have negative unit margins, since with second option - negative marginshigher volumes = lots of losses
      - jacques_chester 8y ago
        > If Delta airlines started charging for 2nd baggage, and after their announcement United/American/Southwest follow suit, that's not a price collusion if it wasn't predetermined secretly through implicit and explicit signaling among the airlines. I understand that. That's why I said "suspicion". Something that seems too convenient and warrants some more poking and prodding and surveillance. It's not as though folks colluding walk around waving "I am colluding, please investigate further" placards.

smallgovt 8y ago

Now there is a well-defined valuation at which Uber can just outright purchase Lyft. $20B and going down.