-Taxi driving , a possible income making job for many individuals, are being thrown under the bus.
-Critics claim that taxi driving is the transportation method of the past generation with flaws such as standing and waiting for one, giving unfamiliar directions, and irritating credit card machines.
-To substitute for this service, in 2011, Uber had been introduced with an efficient way to “summon” a driver. The average price of one of the 13771 medallions, has fallen from $1 million to $690,000, as an aggregate loss of 4 billion dollars of value.
-However, the figures also suggest that the majority of Uber’s growth has come from substituting for taxis rather than from complementing them.
-While Uber expanded approximately tenfold over the past two years, from a bit over an estimated 300,000 rides in June 2013 to 3.5 million dollars in June 2015, yellow cabs’ volume has fallen by 2.1 million dollars during the same period.
- Some critics of Uber, for example, see it as an example of unbridled capitalism, while others such as the left-wing economist Paul Mason see it as a "route to dot communism".
-Economist love that Uber is taking control of pricing in their own favor, particularly this could be a beneficial factor as well as a negative factor in many ways.
-However, economists love it but do customers? Uber is very rare and unique Uber has chosen to use a strategy which is surge pricing. Surge pricing is basically changing the rates depending on the amount of drivers working in that specific time period, it also has to do with the influence of customers.
-Moreover, Uber plans to set the wages based on those aspects because in desperate measures, when business is getting busier, it gives drivers a reason to put aside what they feel are important so that they can make a few extra bucks, creating an overall more drivers on the road to keep more customers happy and take them where they want to go.
-Overall, customers are either contented or dissatisfied with surge pricing because at times customers could possibly be paying more than the average fair nevertheless in times they can catch an uber within a few minutes.
IN DEPTH ANALYSIS
- Looking at the fundamentals of economics, a basic factor has been introduced being the concept of supply and demand. What causes supply and demand to change merely depends on how the product or service is doing in the market.
- Uber has shown an exceptional example of substitution, almost completely replacing taxis, as shown in the graph above. Having better standards and prices had caused such a factor to occur, thus increasing demand for uber and decreasing demand for taxis.
-Prices of the rides are estimated beforehand and can be easily compared across several applications, something that taxi regulation attempted for years, but could not do showing a technology advancement.
- Factors as simple as technology throws taxis way off the list, even though there isn't any technical aspect to it rather than an improvement in public transportation which is type of advancement.
- Profit maximization leads to surge pricing. Uber's surge pricing is set using basic supply and demand. At busy periods (high demand), or when there aren't many drivers around (low supply), Uber's prices go up. This can reduce demand (because fewer people are willing to pay) and increase supply (more drivers come on the road)
- The surge pricing algorithm supposedly reaches a market equilibrium, say two times the normal rate, which means it is still possible (for those who are willing to pay) to get an Uber within a few minutes, therefore making the right amount of drivers deploy, with the right amount of demand.
-Surge pricing can connect to price elasticity as it is a measure of quantity demanded responding to the change in price. As the price increases for uber, demand will greatly decrease, but supply would increase, therefore reaching and equilibrium at certain point, thus showing that Uber is perfectly elastic.
-Uber allows an open, shared, distributed, democratic decision-making process and governance systems, at the local, national and global level. In order for a process to be democratic, it must be formed with equality and fairness in mind, which Uber portrays.