4 ms·

The real meat of the story is tucked towards the end of the article. Both Uber and Lyft would like to lock drivers exclusively to one service and not have them

The real meat of the story is tucked towards the end of the article. Both Uber and Lyft would like to lock drivers exclusively to one service and not have them constantly price compare. Right now, basically every driver has both apps open which makes the market almost perfectly competitive with no opportunity to extract monopoly rents. However, Uber and Lyft are also deathly afraid of any move to classify workers as employees rather than contractors and one of the key tests is whether the worker is free to set their schedules and working relationships. The 30% rate is largely illusory, they're not expecting a large chunk of their workforce to pay it. Rather, it's to get them committed to Uber over Lyft while trying to avoid more onerous regulation.

rtpg 11y ago
Only 2 major sellers does not make a market perfectly competitive by any stretch of the imagination, but I digress. The classification point is interesting though. If there's forced lock-in to only Uber or Lyft, then I can't see there not being mass lawsuits about misclassification of workers. The status quo is already almost 50/50 in terms of the IRS classification checklist.
- netcan 11y ago
  Perfect only exists in models. Also, you might think of it as thousands of sellers but only two buyers. In any case, competitiveness has to do with more than the number of actors. Switching costs are pretty low and information is very available. That counts for a good amount. Two buyers/sellers can be still create a competitive market in the right circumstances, with collusion being the biggest danger. Also, drivers still have the option of getting business in other ways. Generally though I agree that the market needs more players, for the employee vs sole trader debate and for competitiveness reasons.
  - eevilspock 11y ago
    > Also, you might think of it as thousands of sellers but only two buyers. The relevant terms are Oligopsony and Monopsony. https://en.wikipedia.org/wiki/Oligopsony https://en.wikipedia.org/wiki/Oligopsony
knowaveragejoe 11y ago
I'm confused, why would a larger cut for Uber make drivers committed to Uber over Lyft?
- rfzabick 11y ago
  FTA: "The rate is part of a tiered fee structure, which will reward drivers by lowering the commission when they complete a certain number of rides in a week"

rtpg 11y ago

Only 2 major sellers does not make a market perfectly competitive by any stretch of the imagination, but I digress. The classification point is interesting though. If there's forced lock-in to only Uber or Lyft, then I can't see there not being mass lawsuits about misclassification of workers. The status quo is already almost 50/50 in terms of the IRS classification checklist.

netcan 11y ago
Perfect only exists in models. Also, you might think of it as thousands of sellers but only two buyers. In any case, competitiveness has to do with more than the number of actors. Switching costs are pretty low and information is very available. That counts for a good amount. Two buyers/sellers can be still create a competitive market in the right circumstances, with collusion being the biggest danger. Also, drivers still have the option of getting business in other ways. Generally though I agree that the market needs more players, for the employee vs sole trader debate and for competitiveness reasons.
- eevilspock 11y ago
  > Also, you might think of it as thousands of sellers but only two buyers. The relevant terms are Oligopsony and Monopsony. https://en.wikipedia.org/wiki/Oligopsony https://en.wikipedia.org/wiki/Oligopsony

knowaveragejoe 11y ago

I'm confused, why would a larger cut for Uber make drivers committed to Uber over Lyft?

rfzabick 11y ago
FTA: "The rate is part of a tiered fee structure, which will reward drivers by lowering the commission when they complete a certain number of rides in a week"