OnDemand WTP Pricing Research

Discussion: Uber agrees to new national policy that will limit surge pricing during emergencies

ph.logo.sublogos.news.white-DISCUSSION

The Verge Article

The taxi app falls in line with numerous laws that consider dynamic pricing during storms to be illegal price gouging

Uber is well known for using a dynamic model it calls surge pricing that adjusts the cost of a fare based on supply and demand. The company’s CEO, Travis Kalanick, has defended this practice, saying it puts more cars on the road, despite public outcry from customers, media, and politicians. But the company drew particular heat when surge pricing kicked in during extreme weather in New York City, specifically during Hurricane Sandy and a recent snowstorm. At the time the NY attorney general Eric Schneiderman released a statement implying that Uber’s surge pricing during these periods could constitute price gouging.

Today the company announced that it reached an agreement with the NY attorney general’s office to cap surge pricing during emergencies, a move Schneiderman called, “a thoughtful application of NY law to new #tech.” A press release from Schneiderman’s office also stated that Uber plans to implement this new policy not just in NY, but on a national level.

Top Comments

so you prefer not to got even when you need to – badly? how hard is it to understand that the alternative to surge pricing is “no cars available”?

 

Do you realize how absurd it is at times though? I got quoted a 7 X trip one time.

I don’t complain though, I just choose to use another service when surge pricing kicks in and I did that one time I got quoted 7 X. Got quoted 2.5 X last weekend and went with Lyft.

I think the fact that it leaves a bad taste in customers mouths will bite them in the butt one day.

 

Why is that absurd?

You realize there are two outcomes:

  1. The last few available cars are extremely expensive.
  2. There are no available cars for the last people who want them.

Without surge pricing it’s almost guaranteed that during the next major storm you will open the app onto to see, “No cars available.” Yesterday you had a choice. Tomorrow you won’t.

 

Exactly. Price fixing almost always leads to supply shortages. We seem examples of it all the time around the world, yet people still refuse to acknowledge the reality of market based price discovery versus politician based price fixing because they’d rather make emotional arguments about “fairness”.

 

My cursory reading of the NY law (and I’m a West-coaster, so not directly impacted by it) is so vague as to be applicable to nearly anything at the whim of the A.G.:

http://www.ag.ny.gov/price-gouging

“New York State’s Price Gouging Law (General Business Law § 396-r) prohibits merchants from taking unfair advantage of consumers by selling goods or services for an “unconscionably excessive price” during an “abnormal disruption of the market,” ”

Is it “taking unfair advantage of consumers” for two people to enter into a voluntary contract? If I’m an uber driver and my fees are capped, I have the option of staying home. Does the consumer win in that case?

It is “unconscionably excessive” to charge $X to drive from A to B, when if $X is illegal then there is nodriver to take you from A to B?

As I stated, I’m not impacted by this law, but to me as a consumer, prohibiting me from hiring a cab seems unfair and unconscionable.

More Here: http://www.theverge.com/2014/7/8/5881535/uber-price-gouging-surge-pricing-new-york-agreement

 

5 Comments on "Discussion: Uber agrees to new national policy that will limit surge pricing during emergencies"

Trackback | Comments RSS Feed

Post a Comment

WP-SpamFree by Pole Position Marketing