3 ms·
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
by 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 agoEconomically, 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 agoAt 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 agoNo. 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 agoThe roads are already clogged with cars. Does it matter if they are ride shares or not?
- usrusr 8y agoA 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 agoOr 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?
- dleclere 8y agoActually it's more like a monopsony where a single buyer (uber) can dictate the price to the sellers (drivers). Uber varies the prices it charges consumers (and therefore pays drivers) based on what maximises its profit rather than general economic welfare.