What makes me so mad about this is that laws like this make it impossible for families like mine which choose to not own a car (mostly for $ and less trouble).
I don't object at all to the idea we should help people earning less money. I believe in a crazy high top marginal tax rate (evidence suggests that status concerns more than desire to consume motivates top earners) and substantial redistribution.
So just fucking tax people and give the damn money to low earners. That's one thing the government is decent at and we already have a negative income tax framework. Little market distortions, no helping one kind of worker and leaving the others in the cold and a fairer system for who pays.
Are we really too damn stupid to realize that it's just as much a tax to raise prices? Do we not really care about the poor and just want to show off our supposed virtue? WTF?!?
The idea that Uber and Lyft would find exiting the market to be the best approach in a purely economic sense is implausible in the long run since their marginal cost for serving another area is essentially zero (obv they have costs per user as well but these aren't a reason to leave). Note that they will have to geofence rides regardless whether it be to enforce certain minimum pay rates or bar them all together.
True they may have really shitty service in the area but they could easily just add a banner in their app saying: We apologize for the high prices and poor coverage but we are obliged to comply with city laws that prevent us from offering our normal quality of service. I suspect that covers them re: people assuming they suck in Chicago.
But it makes sense from a negotiating perspective. People will be much more likely to trace their frustration immediately to the city hall and taking a hard line approach makes other cities less likely to try even more moderate versions.
Isn't the fact that both companies are threatening to leave at the same time a sign of collusion? If one leaves, the other would clearly have a monopoly and thus from a business standpoint, they'd prefer to be there. If they both leave (after publicly announcing the intent) that's an act of collusion.
I'm not sure that having a monopoly necessarily implies that they would prefer to be there. It seems plausible that costs could exceed revenues even for a monopoly, this is especially the case if (as the article suggests) raising prices in Minneapolis might reduce sales elsewhere as well.
Direct costs (as in operating in Minneapolis) are unlikely to be too high. I assume cab companies have existed in Minneapolis suggesting a profitable business can exist. Given they can leave so easily also - I assume there are very few sunk costs.
Regarding the cross-city spill-over impacts of seeing different prices, I imagine the impact would need to be substantial. We would also see it as an example used by these companies already when choosing which cities to expand to or not. For example, having been to both NYC and Austin, the rideshare pricing differential in these two places is massive. I wouldn't use rideshare in NYC, but I did in Austin. It's anecdotal, but I think we will struggle to prove this cross-city pricing impact would prevent you from using the rideshare app globally.
Good piece, especially the inclusion of the life satisfaction survey which I think a people lose sight of when discussing roles in the gig economy (if not the gig economy itself).
Counter arguments I've found plausible are that the price increases required to turn a profit have turned it into a luxury service and that these dollars could be better spent on making more robust public transportation systems.
Not necessarily a pricing question, but what are your thoughts on if the "fair" (aka profitable) price makes it only affordable to some and the lost revenue leaves those who can't afford it without an alternative that could potentially otherwise be provided? This would, in change, create inconvenience for those who could afford it after the price increase
I remember Austin had shut down Lyft and Uber for a while, and an app called RideAustin popped up in its place. It got me from point A to point B, but it was definitely a rougher user experience.
Curious if we can identify and analyze other cities where this did happen, and how it played out.
What makes me so mad about this is that laws like this make it impossible for families like mine which choose to not own a car (mostly for $ and less trouble).
I don't object at all to the idea we should help people earning less money. I believe in a crazy high top marginal tax rate (evidence suggests that status concerns more than desire to consume motivates top earners) and substantial redistribution.
So just fucking tax people and give the damn money to low earners. That's one thing the government is decent at and we already have a negative income tax framework. Little market distortions, no helping one kind of worker and leaving the others in the cold and a fairer system for who pays.
Are we really too damn stupid to realize that it's just as much a tax to raise prices? Do we not really care about the poor and just want to show off our supposed virtue? WTF?!?
The idea that Uber and Lyft would find exiting the market to be the best approach in a purely economic sense is implausible in the long run since their marginal cost for serving another area is essentially zero (obv they have costs per user as well but these aren't a reason to leave). Note that they will have to geofence rides regardless whether it be to enforce certain minimum pay rates or bar them all together.
True they may have really shitty service in the area but they could easily just add a banner in their app saying: We apologize for the high prices and poor coverage but we are obliged to comply with city laws that prevent us from offering our normal quality of service. I suspect that covers them re: people assuming they suck in Chicago.
But it makes sense from a negotiating perspective. People will be much more likely to trace their frustration immediately to the city hall and taking a hard line approach makes other cities less likely to try even more moderate versions.
Isn't the fact that both companies are threatening to leave at the same time a sign of collusion? If one leaves, the other would clearly have a monopoly and thus from a business standpoint, they'd prefer to be there. If they both leave (after publicly announcing the intent) that's an act of collusion.
I'm not sure that having a monopoly necessarily implies that they would prefer to be there. It seems plausible that costs could exceed revenues even for a monopoly, this is especially the case if (as the article suggests) raising prices in Minneapolis might reduce sales elsewhere as well.
Direct costs (as in operating in Minneapolis) are unlikely to be too high. I assume cab companies have existed in Minneapolis suggesting a profitable business can exist. Given they can leave so easily also - I assume there are very few sunk costs.
Regarding the cross-city spill-over impacts of seeing different prices, I imagine the impact would need to be substantial. We would also see it as an example used by these companies already when choosing which cities to expand to or not. For example, having been to both NYC and Austin, the rideshare pricing differential in these two places is massive. I wouldn't use rideshare in NYC, but I did in Austin. It's anecdotal, but I think we will struggle to prove this cross-city pricing impact would prevent you from using the rideshare app globally.
I guess if you compare to cab companies then it does seem plausible that they could remain profitable.
Good piece, especially the inclusion of the life satisfaction survey which I think a people lose sight of when discussing roles in the gig economy (if not the gig economy itself).
Counter arguments I've found plausible are that the price increases required to turn a profit have turned it into a luxury service and that these dollars could be better spent on making more robust public transportation systems.
Not necessarily a pricing question, but what are your thoughts on if the "fair" (aka profitable) price makes it only affordable to some and the lost revenue leaves those who can't afford it without an alternative that could potentially otherwise be provided? This would, in change, create inconvenience for those who could afford it after the price increase
The actual minimum wage is zero.
I remember Austin had shut down Lyft and Uber for a while, and an app called RideAustin popped up in its place. It got me from point A to point B, but it was definitely a rougher user experience.
Curious if we can identify and analyze other cities where this did happen, and how it played out.