“Jacking up prices may not be the only way to balance supply and demand for taxis.”

The Concept of Surge Pricing



The term "surge pricing" refers to the sporadic increase in rates experienced by Uber customers. It is an uncommon occurrence for many people to go out late at night and then hail an Uber home (Uber's Surge Pricing, n.d.). Even then, it is not always convenient for them, since they may become victims of unusual fare hikes. Surge pricing can be inconvenient and even aggressive, particularly when used during an emergency.



Technological Advancements and Regulation



One of Uber's machine-learning specialists, Jeff Schneider, recently hinted at the company's commitment to the advancement of technology-based systems that compete with prices in car allocation. However, even if such a technological advancement proves useful, local governments do not need to regulate or ban surge pricing to reduce its effect.



The Functioning of Surge Pricing



A recent publication analysis by Uber illustrates how the system is expected to work. The publication also outlines two primary high-demand scenarios in New York City (Uber's Surge Pricing: A Quick and Dirty Guide, n.d.) For example, in March 2015, surge pricing occurred after a concert by Ariana Grande in an arena at the core of Manhattan where the number of people using the Uber app quadrupled in a short period (A fare Shake, 2016). Likewise, another incidence occurred on the New Year’s Eve in 2014. Although in 2014, there was no surge pricing due to the failure of the pricing algorithm for roughly 26 minutes.



Impact of Public Transport Management and Competition



The issue of whether Uber retains surge pricing is dependent on the success of local governments in public transport management. Besides, it also depends on private competitors to the company. Therefore, surge pricing is not expected to generate a significant financial loss for Uber or its drivers. However, regions with poor public transport and where Uber enjoys a pure monopoly, the situation will be different. (274 words)



References:



1. A fare shake. (2016, May 14). Retrieved November 26, 2017, from https://www.economist.com/news/finance-and-economics/21698656-jacking-up-prices-may-not-be-only-way-balance-supply-and-demand-taxis 2. Uber's Surge Pricing: A Quick and Dirty Guide. (n.d.). Retrieved November 26, 2017, from http://time.com/3633469/uber-surge-pricing/ 3. Uber Surge Pricing. (n.d.). Retrieved November 26, 2017, from https://techboomers.com/t/uber-surge-pricing

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