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>> There is literally no way for a mass-market taxi service to make money unless they have a monopoly, or some unexpected disruptive technology comes along that

>> There is literally no way for a mass-market taxi service to make money unless they have a monopoly, or some unexpected disruptive technology comes along that gives one company an unassailable advantage in lowering costs. I dont understand this comment. Traditional taxis made money for generations, why cant Uber? If anything, Uber has more advantages. EVEN: Traditional taxis had the "rent" of medallions. Uber has the rent of Corporate HQ costs. DRAWBACK: Uber gets raw deals in some cities because the local Taxi commission has sweetheart deals with the city (Case in point: NYC, NYC TLC, and Mayor DeBlasio: https://www.nytimes.com/2012/07/18/nyregion/de-blasio-reaps-big-donations-from-taxi-industry-he-aided.html https://www.nytimes.com/2012/07/18/nyregion/de-blasio-reaps-...) BENEFIT: More efficiency, less wasted miles w/o riders. BENEFIT: Group rides are highly efficient. BENEFIT: National/international scale BENEFIT: National/international scale to get better loan rates, prices, and even self-loan to drivers. This isnt to say they dont have to raise prices, but I dont see how they can never make money.

bryanlarsen 8y ago
Taxis made money because the medallion situation limited competition, and because fare prices were fixed by the city at levels that ensured a profit.
- TuringNYC 8y ago
  I see your point, in theory, but the increasing medallion investment/rent just lowered profit further and further until the profit to drivers was some very low wage. The driver is not usually the medallion owner, and hence the rent for the medallion goes elsewhere. The driver just ends up with the metered fare net of medallion costs. Similarly, Uber leads to a sort of perfect competition equilibrium (https://en.wikipedia.org/wiki/Perfect_competition https://en.wikipedia.org/wiki/Perfect_competition) where drivers keep entering the marketplace until wages drop to some low wage, but not below that (because below that, drivers start to leave the marketplace, thus decreasing supply and increasing the equilibrium price point.)
  - jfim 8y ago
    Economically, it does lead to a competition equilibrium, but it does not take into account the cost of externalities such as additional traffic and pollution generated by having more drivers.
    - xyzzy_plugh 8y ago
      At appropriate saturation the number of cars being displaced by riders is significant, though I wonder what that is and how it trends over time. If I was in college today, I might never consider buying a vehicle.
      - kevin_thibedeau 8y ago
        No. What happens is that roads keep becoming saturated until they are clogged with ride shares and the riders bail out when they realize they can walk faster. The equilibrium point creates complete havoc for everyone else and little productive work is actually done.
        zip1234 8y ago
        The roads are already clogged with cars. Does it matter if they are ride shares or not?
        usrusr 8y ago
        A saturated Uber-model ride share market is one where an empty car is seconds away whenever you need one. Idle ride shares matter a lot.
        kopos 8y ago
        Or it could be a model where there is always a car with a ride share available. I mean could it be the Uber Go model is the best win-win for the customers, Uber and the drivers?
  - 8y ago
- sonnyblarney 8y ago
  Taxis (drivers) don't make money, or rather, they are subjected to the same degree of commoditization either way. Medallion owners make money. All of the profits are extracted into the medallions. It's actually a bad system, really. 'Driving a taxi' is a total commodity, there's a limitless supply of people willing to do it for sub minimum wage, so the money just goes to the owners. Rent extraction is usually a bad way to manage things; it's kind of like real-estate speculation, but there's no need for it. It'd be nice to see the cities embrace Uber-like systems, capture the profits from it, enforce basic laws, and somehow make it fair. I'm not holding my breath.
taysic 8y ago
I feel like Uber can always make money as a marketplace - but competitive pressures from other marketplaces will drive profits down. However, is there any further growth in the model? Seemingly no unless they gain monopoly.
- nospitate 8y ago
  You are making me smack my forehead to the point of giving myself a concussion. If your comment were true, market economies as a concept would be unviable. The global economy would not exist if your comment were true. Ride-sharing is a market. People compete in the market. That’s how literally every solvent business in the world operates.

bryanlarsen 8y ago

Taxis made money because the medallion situation limited competition, and because fare prices were fixed by the city at levels that ensured a profit.

TuringNYC 8y ago
I see your point, in theory, but the increasing medallion investment/rent just lowered profit further and further until the profit to drivers was some very low wage. The driver is not usually the medallion owner, and hence the rent for the medallion goes elsewhere. The driver just ends up with the metered fare net of medallion costs. Similarly, Uber leads to a sort of perfect competition equilibrium (https://en.wikipedia.org/wiki/Perfect_competition https://en.wikipedia.org/wiki/Perfect_competition) where drivers keep entering the marketplace until wages drop to some low wage, but not below that (because below that, drivers start to leave the marketplace, thus decreasing supply and increasing the equilibrium price point.)
- jfim 8y ago
  Economically, it does lead to a competition equilibrium, but it does not take into account the cost of externalities such as additional traffic and pollution generated by having more drivers.
  - xyzzy_plugh 8y ago
    At appropriate saturation the number of cars being displaced by riders is significant, though I wonder what that is and how it trends over time. If I was in college today, I might never consider buying a vehicle.
    - kevin_thibedeau 8y ago
      No. What happens is that roads keep becoming saturated until they are clogged with ride shares and the riders bail out when they realize they can walk faster. The equilibrium point creates complete havoc for everyone else and little productive work is actually done.
      - zip1234 8y ago
        The roads are already clogged with cars. Does it matter if they are ride shares or not?
        usrusr 8y ago
        A saturated Uber-model ride share market is one where an empty car is seconds away whenever you need one. Idle ride shares matter a lot.
        kopos 8y ago
        Or it could be a model where there is always a car with a ride share available. I mean could it be the Uber Go model is the best win-win for the customers, Uber and the drivers?
- 8y ago
sonnyblarney 8y ago
Taxis (drivers) don't make money, or rather, they are subjected to the same degree of commoditization either way. Medallion owners make money. All of the profits are extracted into the medallions. It's actually a bad system, really. 'Driving a taxi' is a total commodity, there's a limitless supply of people willing to do it for sub minimum wage, so the money just goes to the owners. Rent extraction is usually a bad way to manage things; it's kind of like real-estate speculation, but there's no need for it. It'd be nice to see the cities embrace Uber-like systems, capture the profits from it, enforce basic laws, and somehow make it fair. I'm not holding my breath.

taysic 8y ago

I feel like Uber can always make money as a marketplace - but competitive pressures from other marketplaces will drive profits down. However, is there any further growth in the model? Seemingly no unless they gain monopoly.

nospitate 8y ago
You are making me smack my forehead to the point of giving myself a concussion. If your comment were true, market economies as a concept would be unviable. The global economy would not exist if your comment were true. Ride-sharing is a market. People compete in the market. That’s how literally every solvent business in the world operates.