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If it were sincere, they would do these things without being required by law to do so.

oconnor663 7y ago
Competitive forces prevent them from raising wages unilaterally, because their customers are extremely price sensitive. They're not going to commit corporate suicide over their ethical preferences, any more than most people would.
- ghaff 7y ago
  >because their customers are extremely price sensitive The proposal suggests to me that they think their customers are not extremely price sensitive but they're also not loyal to a specific supplier. In other words, they'll take almost as many rides even if the price goes up but they'll still go with whoever is cheapest.
  - oconnor663 7y ago
    Right, I was struggling with the phrasing for that. The overall demand may be somewhat inelastic, but the cost of switching firms is zero.
  - adventured 7y ago
    They may in fact think their customers are price sensitive (the majority of customers are for any mass service; we already know that most of Uber's customers are price sensitive), while their aim is to capture their customers in a regulatory manner so that they have no or few alternatives. If they can establish a regulatory framework that favors them (Uber), they can raise prices as competition is further restricted, to more than offset the $21 / hour. Their ideal has to be to establish that favorable competition environment, enabling considerable price increases that get them closer to profitability (ie exceeds the wage cost increase by a large margin). In the current situation, Uber is facing a bankruptcy scenario with their low sales growth, extreme burn rate and with a competitive market where they can't freely increase prices. That tells you what their goal has to be. If they were certain their customers were not price sensitive, Uber would have already spiked their pricing far higher to push toward profitability.
    - ghaff 7y ago
      >If they were certain their customers were not price sensitive, Uber would have already spiked their pricing far higher to push toward profitability. Many/most Uber customers would use a materially cheaper equivalent service if available because the switching costs are low. However, that's not the same as price elasticity (of demand) which is what the term usually refers to. Price elasticity is about how much less they'd use any price-competitive service as the price increases. I'm honestly not sure what that curve looks like. Within reason, pricing wouldn't affect my usage much at all. But I'm a light user of these services and use them almost entirely for business. Certainly I'm a very different profile from a young urban professional who doesn't own a car. ADDED: Between surge pricing and other pricing experiments I'm sure they conduct, I would imagine that Uber has a pretty good idea of what demand and driver supply curves look like.
  - novok 7y ago
    I’ve read somewhere ride share companies make more total revenue when prices are cheaper, and people use it less when its more expensive. Since these companies make more money with more total revenue, i’m guessing its in their interest to make it cheap. It makes sense, if something is cheaper, you use more of it. If its more expensive, you start using substitutes, as the benefits of rideshare gets dwarfed by its extra cost. It’s literal econ 101
    - ghaff 7y ago
      It depends on what the price elasticity of demand is. At least in the simple case, there is some price point at which revenue is maximized. Higher prices drive demand down faster than they drive revenue up. Lower prices drive revenue down faster than greater demand drives them up.
- behringer 7y ago
  uber and ethical preferences? hahahhaha
Matticus_Rex 7y ago
They think they can survive doing it, but their competitors can't (or can't survive it as well). They probably can't survive doing it if their competitors don't have to. Whether they're sincere about thinking it's a good thing or not is irrelevant to the practicality of the suggestion, and the suggestion only makes sense for them to make as a law.
- dylan-m 7y ago
  More cynically, they can survive it as long as their competitors die first :b

Competitive forces prevent them from raising wages unilaterally, because their customers are extremely price sensitive. They're not going to commit corporate suicide over their ethical preferences, any more than most people would.

ghaff 7y ago
>because their customers are extremely price sensitive The proposal suggests to me that they think their customers are not extremely price sensitive but they're also not loyal to a specific supplier. In other words, they'll take almost as many rides even if the price goes up but they'll still go with whoever is cheapest.
- oconnor663 7y ago
  Right, I was struggling with the phrasing for that. The overall demand may be somewhat inelastic, but the cost of switching firms is zero.
- adventured 7y ago
  They may in fact think their customers are price sensitive (the majority of customers are for any mass service; we already know that most of Uber's customers are price sensitive), while their aim is to capture their customers in a regulatory manner so that they have no or few alternatives. If they can establish a regulatory framework that favors them (Uber), they can raise prices as competition is further restricted, to more than offset the $21 / hour. Their ideal has to be to establish that favorable competition environment, enabling considerable price increases that get them closer to profitability (ie exceeds the wage cost increase by a large margin). In the current situation, Uber is facing a bankruptcy scenario with their low sales growth, extreme burn rate and with a competitive market where they can't freely increase prices. That tells you what their goal has to be. If they were certain their customers were not price sensitive, Uber would have already spiked their pricing far higher to push toward profitability.
  - ghaff 7y ago
    >If they were certain their customers were not price sensitive, Uber would have already spiked their pricing far higher to push toward profitability. Many/most Uber customers would use a materially cheaper equivalent service if available because the switching costs are low. However, that's not the same as price elasticity (of demand) which is what the term usually refers to. Price elasticity is about how much less they'd use any price-competitive service as the price increases. I'm honestly not sure what that curve looks like. Within reason, pricing wouldn't affect my usage much at all. But I'm a light user of these services and use them almost entirely for business. Certainly I'm a very different profile from a young urban professional who doesn't own a car. ADDED: Between surge pricing and other pricing experiments I'm sure they conduct, I would imagine that Uber has a pretty good idea of what demand and driver supply curves look like.
- novok 7y ago
  I’ve read somewhere ride share companies make more total revenue when prices are cheaper, and people use it less when its more expensive. Since these companies make more money with more total revenue, i’m guessing its in their interest to make it cheap. It makes sense, if something is cheaper, you use more of it. If its more expensive, you start using substitutes, as the benefits of rideshare gets dwarfed by its extra cost. It’s literal econ 101
  - ghaff 7y ago
    It depends on what the price elasticity of demand is. At least in the simple case, there is some price point at which revenue is maximized. Higher prices drive demand down faster than they drive revenue up. Lower prices drive revenue down faster than greater demand drives them up.
behringer 7y ago
uber and ethical preferences? hahahhaha

Matticus_Rex 7y ago

They think they can survive doing it, but their competitors can't (or can't survive it as well). They probably can't survive doing it if their competitors don't have to. Whether they're sincere about thinking it's a good thing or not is irrelevant to the practicality of the suggestion, and the suggestion only makes sense for them to make as a law.

dylan-m 7y ago
More cynically, they can survive it as long as their competitors die first :b