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0 pointsvkou7y ago0 comments

> There is also a larger problem Uber solves (one of many) -- once you lose density (i.e., outside airport/centercity) it is hard to hail a cab, so you have to dial a cab. You dail, they invariably say "wait outside be there in 5 min" -- sometimes they show up in 5min, sometimes 10min, sometimes 30min, sometimes never. Variable pricing and GPS tracking solves this.

Variable pricing solves this for people with the ability to pay. Rationing scarce goods by wealth is not necessarily a better overall outcome then distributing scarce goods by lottery.

Also, if full-time night-shift cabbies are driven out of business by part-time rideshares, you may end up in a situation where the only night-time service available - ever - is at surge pricing. This is less of an issue in NYC, then it is in smaller towns.

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TuringNYC7y ago

I agree with almost everything you say. However, I do want to note that you can pay with dollars or pay with time. The old way was that you paid with time/uncertainty. You'd wait, and wait, and wait. Now you can get what you want right away, you just need to auction/bid on it to get it immediately. Totally agreed this solves the problem for those who can bear higher prices, so it disfavors the poor.

That said, people have voted quite a bit with their wallets and accepted surge pricing to solve the old problem of uncertainty. When I used to be a consultant and go to the airport every Monday morning, i'd have to leave 40+minutes earlier just in case the dial-a-cab randomly decided not to show up for 30min. That problem has mostly gone away.

Same thing for rainy weather -- cabs would disappear. That was legitimate because the cost of driving is indeed higher in rain (fewer rides per hour) and thus deserves more compensation. Instead...the old way was...dial-a-cabs would just stop answering their phone during storms, etc.

Sometimes people did nasty things like call 2 separate cab companies, go with the first arrival, and leave the other one hanging (another problem solved by ride-hailing services, who have the concept of identity and reputation scores.)

nkurz7y ago

Same thing for rainy weather -- cabs would disappear. That was legitimate because the cost of driving is indeed higher in rain (fewer rides per hour) and thus deserves more compensation.

I think you have this backwards. The traditional explanation is that it's harder to get a cab when it rains because demand goes up, not down, because no one wants to walk in the rain. The more complex modern explanation[1] is that the higher demand but slower traffic offset, so cab drivers make the same amount in the rain as at other times. In either case, I don't think the cabs actually "disappear", rather they are all occupied. Or maybe this is what you meant?

[1] http://nymag.com/daily/intelligencer/2014/11/why-you-cant-ge...

ThrustVectoring7y ago

>I do want to note that you can pay with dollars or pay with time.

And it's generally far better overall to pay with money. If you pay with money, then someone gets that money - Uber drivers earn more through surge pricing, in this instance.

If you pay with time, then that time is simply gone forever.

vkouOP7y ago

It's not raining. There's one cab. The fare costs 5 dollars. There's one rider. Everything works great.

It's raining. There's one cab. The fare costs 5 dollars. There's two riders. The driver flips a coin. One rider pays $5, and gets a ride. The other has to wait, and then gets a ride.

It's raining. There's one cab. There's surge pricing, so the fare costs $15. There's two riders. One rider can afford to pay $15, and gets a ride. The other has to wait, until the surge dies down, and then pays $5 for a ride.

When there's a shortage of cabs, someone will have to pay with money. Under the lottery system, it's a random rider. Under the price surge system, it's the poorest rider. You haven't actually produced any more value in the third case. The same amount of time is wasted.

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