The Morality of Surge Pricing
Russ Roberts
48840

I have no issue with the ethics or morality of surge pricing. My issue is that they have been using their giant coffers of money to subsidize pricing for so long to stimulate supply (drivers) and demand (riders). Now both parties have distorted views on what the real price of a ride should be even with surge pricing.

I often take an Uber X 1.1 miles commute in Seattle when I’m rushed. This has been usually been priced $6-$7 in non-surge. During surge it’s been variable how high it will go but the most it’s even been that I’ve seen is $15 and that’s in the afternoon, during rush hour when there’s a Seahawks game in town.

Most recently, I tried to do this commute in the morning on a regular day, no event in town and not even during rush hour. It was Crazy $20.53 for the same 1.1 mile drive. I realized in that moment I had no idea what the “right” price should be.

There’s nothing wrong with demand driven pricing, nor am unnecessarily criticizing uber for this $20 fare (which I didn’t take, I used Lyft and it was $7). Just pointing out the perils here of Uber’s historical started to heavily subsidize. Once the music stops and the subsidies end, I am interested to see the end game of how committed customers are to pay the real market rates of an uber ride.

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