Uber upholds capitalism, (possibly) learns downside of price gouging

In my Uber&#x2F;Lyft-less city we had a snowstorm last week and I needed to get to the airport. I spent 15 minutes letting my phone fruitlessly ring to various cab companies before giving up and digging my car out to drive and park for probably $90+ for the course of my trip.<p>It&#x27;s a curious human psychological tic that people think this is a better situation for me than looking at my phone&#x27;s Uber app and deciding whether $90 for this particular ride would be worth it or not. And not just thinking that the latter is better for me, but that I need to be sheltered by law from encountering the former situation.

It&#x27;s a supply and demand thing - there&#x27;s a choice -- Some people get cabs at sub-market rate, and some stand on the corner for an hour trying to get a cab -- or -- Some people pay more for a cab, while others balk at the price and find an alternative method of transportation.<p>I&#x27;ve stood outside for an hour on a cold, snowy, windy New Year&#x27;s eve&#x2F;morn in Boston trying to get a cab... I&#x27;ll take the price hike vs. the jockeying for sidewalk position, fights over who gets what cab, and other silliness. I think the drivers would too.

This article asserts that if taxi cabs were run out of business by Uber then nothing would remain to keep Uber&#x27;s prices in check. That is completely incorrect. There are a number of competing apps for rides (or they would be built quickly to compete) and cars could freely undercut Uber. I&#x27;d be the first to jump in and build an app that pulled each service&#x27;s ride price to compare options.<p>If price gouging continued, lower priced alternatives would flourish. I&#x27;m struggling to see why this demand-driven pricing when provided BEFORE you get in the car and make your purchasing decision is a problem.<p>Without price gouging, would you even be able to get a ride in a snowstorm? Just because something is available in good conditions at a normal fee does not mean you can just stop planning your logistics and assume that service will be available all the time.<p>That said, what the market-based alternative does crowd-out is those without the resources to pay spiked fares that may have lucked into a cab in previous circumstances.

If you aren&#x27;t willing to pay more during peak times, you have to deal with the scarcity. This is problematic for things like food, water, and shelter during emergencies...not so much for luxury car rides across town.

As I understand it, Uber&#x27;s prices are listed prior to contracting for a ride. Uber&#x27;s market is clearly the middle to upper income brackets. If it&#x27;s understood that the price is time and conditions-variant, I fail to see how their pricing method is unethical.

&quot;Let Uber put taxis out of business, as sometimes seems its intention, and there&#x27;d be no check on its &quot;surge&quot; pricing and no way at all for ordinary people to get around.&quot;<p>No way at all for ordinary people to get around? Is this a joke? As far as I&#x27;m aware, ordinary people take ordinary transportation, like, you know, subways, buses, bikes and such.

&gt; <i>Uber&#x27;s defense is that it needed to charge so much more to encourage its drivers to stay on the job</i><p>Maybe people would be more OK with it if Uber kept their commission flat, i.e. they get paid the same for each trip regardless of how much they are charging extra for the conditions. Not saying they have a duty to do this, just that from a PR point of view it would get rid of the assumption that they put prices up too much to increase their profits.

There&#x27;s a great interview with Mike Munger on Econtalk about the price mechanism during an emergency: <a href="http://www.econtalk.org/archives/2012/11/munger_on_john.html" rel="nofollow">http:&#x2F;&#x2F;www.econtalk.org&#x2F;archives&#x2F;2012&#x2F;11&#x2F;munger_on_john.html</a>

I think the analogy here to price gouging during an hurricane is quite a stretch here. I don&#x27;t think many would agree with &quot;surge pricing&quot; on essentials or transportation during Hurricane Katrina where the alternative might be death or extreme property damage. I don&#x27;t see how that applies to the vast majority of Uber surge pricing scenarios.<p>I have a friend who lives in Pac Heights and gets hit with surge pricing all the time, likely because few Ubers are willing to pick up customers there. He&#x27;s switched to Flywheel, which works well and doesn&#x27;t have surge pricing. Seems like everyone wins here. Meanwhile, I live in SOMA, rarely get hit with surge pricing, and pretty much exclusively use UberX&#x2F;Uber.

Experiments using the Ultimatum Game have shown that people hate feeling like they&#x27;re being ripped off, no matter how much we think they should just act rationally and understand the circumstances.<p>A great book on this is Priceless by William Poundstone.

Sounds like a bunch of rich people complaining about having to pay the hired help extra to deal with undesirable work conditions to me.

Are auctions unethical?

The dilemma for Uber here is that a 6x or 7x multiplier completely changes the market for a service. It&#x27;s an increase from $30 to $200. If it was just a 2x multiplier, people would be much more accepting, since it would move from pricey to really pricey.

I found myself using other service more often when I see a surcharge. Especially for short rides, I prefer waiting and extra 5 minutes and spend half of the money.

The bigger problem is customers opinion of the company and service. Great you got my business when I was over a barrel but I&#x27;ll probably use someone else the other 99 times. Amazon keeps its pricing low for a reason. cutting fees during emegencies is how you build customer loyalty.

Price-gouging serves a purpose: it ensures that the service in question is not unevenly distributed to the first customer there. In situations like transit this advantage isn&#x27;t as obvious as in situations like a gas shortage. Are cabs in the Bay Area regulated in terms of max prices? I end up avoiding Uber in surge times because basically every other option is cheaper.

What is cool with price gouging is that it makes standard pricing appear like an innovation premium user would pay for.

$94 11 minute Uber rides...<p>This is why regulation of industry is not always an attempt to hold back the unbridled forces of &quot;progress.&quot;