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Re:Uber Makes Economists Sad by lhc- on Thursday July 10, 2014 @04:09PM (#8016949)
Uh, its not like surge pricing is optional to get a faster car. If they price increases, there is no subsidizing going on. To take advantage of the theoretically larger supply, I will have to pay the higher price, and when the price decreases, there is no guarantee that the supply will remain high so I may still be unable to get a cab at the lower 'subsidized' price.
Re:Uber Makes Economists Sad by judk on Thursday July 10, 2014 @04:33PM (#8017087)
You are ignoring marginal cost. If surge pricing covers relatively-fixed expenses of car mainetance etc, it enables slow-business hours to be marginally profitable at a lower price than otherwise.