5 ms·

Yeah, there's just that little price gouging problem during times of scarcity. I think they took a big PR hit when the cost of rides skyrocketed during recent s

by excitom 13y ago

Yeah, there's just that little price gouging problem during times of scarcity. I think they took a big PR hit when the cost of rides skyrocketed during recent storms. Old style regulated cab companies can't do that.

eddieroger 13y ago
I got hit by a price modifier during my last trip using Uber, but I didn't (and still don't) think gouging is the right word. I figure it's supply and demand modifier. They can't change supply, but demand has gone up for some reason (storms, in your scenario and mine, actually). Some people aren't willing to pay more, so it curbs demand, while incentivizing drivers who may not wish to drive in inclement weather to stay out. Of course, it's really just taking advantage of a situation to Uber's benefit, but I still think "gouging" is too strong of a word for it.
- saraid216 13y ago
  Price gouging is supply and demand. It's just supply and demand in ways that seem particularly unfair, like withholding food to make a profit. Whether or not you call it gouging mostly has to do with how essential a service you consider transportation to be.
  - jaibot 13y ago
    It's not gouging when there's competition - all of the other ways of getting around (cabs, public transit, friends who have cars, other ride sharing/providing services) are as available as they were previously. If Uber were the _only_ way to get around, then it could _potentially_ be gouging.
  - jseliger 13y ago
    Price gouging is supply and demand. It's just supply and demand in ways that seem particularly unfair, like withholding food to make a profit. As noted elsewhere in this thread, the alternative is a shortage—that is, not being able to acquire it for any price. Wanting to make a good or service unavailable to anyone at any price is... odd. See http://www.econtalk.org/archives/2007/01/munger_on_price_1.html http://www.econtalk.org/archives/2007/01/munger_on_price_1.h... for more.
    - Philadelphia 13y ago
      A shortage for everybody is more fair than a shortage just for those who aren't able to pay.
      - ewang1 13y ago
        It doesn't matter that it isn't "fair". There are going to be people who are willing to pay the increased rate. The alternative is no drivers on the road, so the increased demand pricing probably comes out on top in terms of number of rides completed.
      - natrius 13y ago
        Surge pricing lures more drivers to the road because of the extra profit. More passengers are moved with surge pricing than without it. You're saying that it's more "fair" for fewer people to get the rides they want? Laws against price gouging are almost always against the public interest.
        jacalata 13y ago
        Is there evidence for this actually happening, or is it still just a hypothesis? I don't remember seeing any evidence for "more drivers drove during the storm/on NYE than would have without increasing prices" the last few times it came up.
      - eddieroger 13y ago
        Business isn't fair, and not all services are targeted at all consumers. Rates stabilize to what the market will bear. If the $texas higher that Uber was during peak times was the norm, Uber wouldn't have business. If it was lower, cars would never be available. This is just an adjustment that they specifically call out. Besides, this is a black car service we're talking about and not public transit, and even the bus costs more during some times of the day. Also, it's not an overall shortage. Take San Francisco for example: there are lots of public transportation options, yellow cabs, and Uber clones, forgetting walking or bicycles. What's in shortage? Only Uber.
Meekro 13y ago
Regulated cab companies simply sold out during the snowstorm -- there were more people asking for rides, and fewer drivers willing to drive. Uber's approach solved both problems: filter down the list of ride requests to those who really need to go, and provide an incentive for drivers to drive during the really nasty weather. Uber is a luxury good, and the price floats with supply/demand. There's nothing wrong with that, and no one is entitled to use their service.
bhickey 13y ago
Have you tried getting a regular cab ride during a snowstorm? At the beginning of this year it took me three hours to get a cab after Boston got a few inches of snow.
- jaibot 13y ago
  This neatly demonstrates what the alternative to "gouging" is - a shortfall of supply. Like breadlines for transit.
  - fennecfoxen 13y ago
    This also happened when the city of New York demanded price controls, and then gas rationing, following Hurricane Sandy. Gas lines for miles.
jaibot 13y ago
The thing is the alternative to the "gouging" isn't "lower priced rides for everyone", it's "most people can't get a hold of a cab no matter how badly they want one". The "gouging" has three big effects: (1) More drivers willing to deal with the weather for the increased pay, so more people can get out of the storm; (2) A (highly imperfect) way to prioritize the people who most want/need the service. A person who really, really, really needs to move quickly has a way to credibly express that preference over someone who would kind of like an Uber, but could do without - by being willing to pay the higher rate. (3), or course, is more money for Uber. (1) and (2) are very good things, and I'm indifferent to (3). "Gouging" is generally only a thing when there's a monopoly, which Uber doesn't have on transportation. People can look up Uber rates and decide if it's still worth it to them to go Uber or take something else. (See http://www.washingtonpost.com/blogs/wonkblog/wp/2013/12/20/ubers-surge-pricing-is-totally-logical-and-fair-so-why-do-people-hate-it-so-much/ http://www.washingtonpost.com/blogs/wonkblog/wp/2013/12/20/u...)
michaelochurch 13y ago
I will accept Uber's argument when they zero their own commission (or perhaps lower it to whatever it costs to keep the lights on) whenever surge pricing is in effect. Then they have the ability to say, "we're also suffering here". Right now, they make more money when surge pricing is in effect and, since I don't have a view into the algorithms, I can't rule out that they more aggressively surge-price than is reasonable. In fact, I'd believe it to be almost certain that they do. It's the fact that Uber profits from misfortune (not surge pricing itself) that is making everyone hate them. Ultimately it's about trade-offs, not absolutes. Is that 5x price hike saving me (compared to how long getting a cab would take) two hours, or 20 seconds? That would be worth knowing. If it's 2 hours, the supply-and-demand argument makes sense: apparently, that's how high the rates must go to compensate drivers for the unpleasantness. If it's 20 seconds, then that's a case of me getting screwed for a minor convenience priced unreasonably.
- al2o3cr 13y ago
  "If it's 20 seconds, then that's a case of me getting screwed for a minor convenience priced unreasonably." Wow, you must be REALLY fun to stand behind in line at the coffee shop. "WADDYA MEAN $3 FOR THIS COFFEE? I COULD HAVE MADE IT FOR 10 CENTS! WHY ARE YOU SCREWING ME?" For reference, "getting screwed" would be what was happening if surge pricing was applied when you got out of the cab without your knowledge - not a advertised-up-front price that you don't agree with.
  - michaelochurch 13y ago
    Uber's justification for surge pricing is that the waits for cabs would be unacceptably long without it. If it's cutting hours off what the wait time would be without surge pricing, then that claim is correct. If it's a 20-second difference then a reasonable person would disagree.
    - ewang1 13y ago
      But that doesn't matter. Uber provides a service, at a price they set. Those who don't want to pay the price can just find an alternative. It's not as if their mission is to provide some kind of community service. Lots of other businesses operate the same way.
tolmasky 13y ago
You have 10 cars and 20 customers that want them. If you think you can write a "who really needs it" algorithm that, I dunno, asks them if they're going to visit their sick grandmother and then has a human balance that against getting to class on time or something, then by all means make that product. In the meanwhile, price is the way the rest of the world works.

by excitom 13y ago

eddieroger 13y ago

I got hit by a price modifier during my last trip using Uber, but I didn't (and still don't) think gouging is the right word. I figure it's supply and demand modifier. They can't change supply, but demand has gone up for some reason (storms, in your scenario and mine, actually). Some people aren't willing to pay more, so it curbs demand, while incentivizing drivers who may not wish to drive in inclement weather to stay out. Of course, it's really just taking advantage of a situation to Uber's benefit, but I still think "gouging" is too strong of a word for it.

saraid216 13y ago
Price gouging is supply and demand. It's just supply and demand in ways that seem particularly unfair, like withholding food to make a profit. Whether or not you call it gouging mostly has to do with how essential a service you consider transportation to be.
- jaibot 13y ago
  It's not gouging when there's competition - all of the other ways of getting around (cabs, public transit, friends who have cars, other ride sharing/providing services) are as available as they were previously. If Uber were the _only_ way to get around, then it could _potentially_ be gouging.
- jseliger 13y ago
  Price gouging is supply and demand. It's just supply and demand in ways that seem particularly unfair, like withholding food to make a profit. As noted elsewhere in this thread, the alternative is a shortage—that is, not being able to acquire it for any price. Wanting to make a good or service unavailable to anyone at any price is... odd. See http://www.econtalk.org/archives/2007/01/munger_on_price_1.html http://www.econtalk.org/archives/2007/01/munger_on_price_1.h... for more.
  - Philadelphia 13y ago
    A shortage for everybody is more fair than a shortage just for those who aren't able to pay.
    - ewang1 13y ago
      It doesn't matter that it isn't "fair". There are going to be people who are willing to pay the increased rate. The alternative is no drivers on the road, so the increased demand pricing probably comes out on top in terms of number of rides completed.
    - natrius 13y ago
      Surge pricing lures more drivers to the road because of the extra profit. More passengers are moved with surge pricing than without it. You're saying that it's more "fair" for fewer people to get the rides they want? Laws against price gouging are almost always against the public interest.
      - jacalata 13y ago
        Is there evidence for this actually happening, or is it still just a hypothesis? I don't remember seeing any evidence for "more drivers drove during the storm/on NYE than would have without increasing prices" the last few times it came up.
    - eddieroger 13y ago
      Business isn't fair, and not all services are targeted at all consumers. Rates stabilize to what the market will bear. If the $texas higher that Uber was during peak times was the norm, Uber wouldn't have business. If it was lower, cars would never be available. This is just an adjustment that they specifically call out. Besides, this is a black car service we're talking about and not public transit, and even the bus costs more during some times of the day. Also, it's not an overall shortage. Take San Francisco for example: there are lots of public transportation options, yellow cabs, and Uber clones, forgetting walking or bicycles. What's in shortage? Only Uber.

Meekro 13y ago

Regulated cab companies simply sold out during the snowstorm -- there were more people asking for rides, and fewer drivers willing to drive. Uber's approach solved both problems: filter down the list of ride requests to those who really need to go, and provide an incentive for drivers to drive during the really nasty weather. Uber is a luxury good, and the price floats with supply/demand. There's nothing wrong with that, and no one is entitled to use their service.

bhickey 13y ago

Have you tried getting a regular cab ride during a snowstorm? At the beginning of this year it took me three hours to get a cab after Boston got a few inches of snow.

jaibot 13y ago
This neatly demonstrates what the alternative to "gouging" is - a shortfall of supply. Like breadlines for transit.
- fennecfoxen 13y ago
  This also happened when the city of New York demanded price controls, and then gas rationing, following Hurricane Sandy. Gas lines for miles.

jaibot 13y ago

The thing is the alternative to the "gouging" isn't "lower priced rides for everyone", it's "most people can't get a hold of a cab no matter how badly they want one". The "gouging" has three big effects: (1) More drivers willing to deal with the weather for the increased pay, so more people can get out of the storm; (2) A (highly imperfect) way to prioritize the people who most want/need the service. A person who really, really, really needs to move quickly has a way to credibly express that preference over someone who would kind of like an Uber, but could do without - by being willing to pay the higher rate. (3), or course, is more money for Uber. (1) and (2) are very good things, and I'm indifferent to (3). "Gouging" is generally only a thing when there's a monopoly, which Uber doesn't have on transportation. People can look up Uber rates and decide if it's still worth it to them to go Uber or take something else. (See http://www.washingtonpost.com/blogs/wonkblog/wp/2013/12/20/ubers-surge-pricing-is-totally-logical-and-fair-so-why-do-people-hate-it-so-much/ http://www.washingtonpost.com/blogs/wonkblog/wp/2013/12/20/u...)

michaelochurch 13y ago

I will accept Uber's argument when they zero their own commission (or perhaps lower it to whatever it costs to keep the lights on) whenever surge pricing is in effect. Then they have the ability to say, "we're also suffering here". Right now, they make more money when surge pricing is in effect and, since I don't have a view into the algorithms, I can't rule out that they more aggressively surge-price than is reasonable. In fact, I'd believe it to be almost certain that they do. It's the fact that Uber profits from misfortune (not surge pricing itself) that is making everyone hate them. Ultimately it's about trade-offs, not absolutes. Is that 5x price hike saving me (compared to how long getting a cab would take) two hours, or 20 seconds? That would be worth knowing. If it's 2 hours, the supply-and-demand argument makes sense: apparently, that's how high the rates must go to compensate drivers for the unpleasantness. If it's 20 seconds, then that's a case of me getting screwed for a minor convenience priced unreasonably.

al2o3cr 13y ago
"If it's 20 seconds, then that's a case of me getting screwed for a minor convenience priced unreasonably." Wow, you must be REALLY fun to stand behind in line at the coffee shop. "WADDYA MEAN $3 FOR THIS COFFEE? I COULD HAVE MADE IT FOR 10 CENTS! WHY ARE YOU SCREWING ME?" For reference, "getting screwed" would be what was happening if surge pricing was applied when you got out of the cab without your knowledge - not a advertised-up-front price that you don't agree with.
- michaelochurch 13y ago
  Uber's justification for surge pricing is that the waits for cabs would be unacceptably long without it. If it's cutting hours off what the wait time would be without surge pricing, then that claim is correct. If it's a 20-second difference then a reasonable person would disagree.
  - ewang1 13y ago
    But that doesn't matter. Uber provides a service, at a price they set. Those who don't want to pay the price can just find an alternative. It's not as if their mission is to provide some kind of community service. Lots of other businesses operate the same way.

tolmasky 13y ago

You have 10 cars and 20 customers that want them. If you think you can write a "who really needs it" algorithm that, I dunno, asks them if they're going to visit their sick grandmother and then has a human balance that against getting to class on time or something, then by all means make that product. In the meanwhile, price is the way the rest of the world works.