Re:The Economics of UberX in NYC
by paulrosenzweig on Monday November 03, 2014 @10:26PM
(#8555009)
I agree that this is concerning, but I think the risk is mitigated by the relatively low tie in. I personally don't care which app I use. So, I end up using whichever service will give me more VC-paid free credit.
Uber has the most VC by far. But, if they use that to kill competitors and subsequently try to raise prices, I'd happily switch to the next upstart that undercuts them.
The only big downside is that it necessarily requires a lot of VC to compete with them right now.
> Uber has the most VC by far. But, if they use that to kill competitors and subsequently try to raise prices, I'd happily switch to the next upstart that undercuts them.
That's the rub of dumping. You basically have to do it indefinitely or you eventually get competition. The lucrative "jack up prices" phase is really hard to safely transition to. Barriers to entry, specifically long lead times, will make dumping more feasible for certain goods or services. It's not trivial to spin up a car service, but I'm not sure the barriers to entry are high enough or not.
There are other ways you can behave anti-competitively without dumping too...
This is what worries me. Uber are the freemarket dream child, but they're using their financial heft to actively distort the market. They've already driven Hailo out of the city, and I wonder who is next. I want Uber to become the de-facto choice by providing good service, not by bullying everyone else out of the city.