Price gouging rules are often applied to "essential" goods and services. An easy way of identifying what's "essential" is to look at price elasticity. Inelastic

Price gouging rules are often applied to "essential" goods and services. An easy way of identifying what's "essential" is to look at price elasticity. Inelastic goods are usually essential. For example, if gasoline prices double, the majority of people can't simply choose to stop using gasoline. They have no alternatives. They either stop doing what they're doing, or they buy gasoline at whatever price is asked. The actual measure of the gasoline price elasticity of demand is -0.26 over the short run [1]. In a city like NY, less than half the population owns an automobile [2], yet more than that proportion rely on transit systems [3]. I can't find a lot of recent data, but a 1999 study puts the price elasticity of demand for taxi fares at -0.22 [4]. Not surprisingly, that's very close to gasoline. Based on that, I suspect that the demand for transit will not reduce because Uber double's their prices. Fewer people may be able to afford it, but with the transit systems down, they will have no alternative. This means that people will stop doing whatever is on the other side of that transport. In many cases, that's their job. When people stop doing their jobs, the economy shrinks. With a population the size of NY, that's not good for anyone. 1 - http://economics.about.com/od/priceelasticityofdemand/a/gasoline_elast.htm http://economics.about.com/od/priceelasticityofdemand/a/gaso... 2 - http://www.streetsblog.org/2011/04/06/new-yorks-car-ownership-rate-is-on-the-rise/ http://www.streetsblog.org/2011/04/06/new-yorks-car-ownershi... 3 - http://www.streetsblog.org/2010/12/21/census-data-show-more-new-yorkers-opting-for-transit-instead-of-driving/ http://www.streetsblog.org/2010/12/21/census-data-show-more-... 4 - http://www.vtpi.org/tdm/tdm11.htm http://www.vtpi.org/tdm/tdm11.htm