So basically you mean than Uber can only make money if most their drivers do not respect the law. Which gives Uber an unfair advantage over the competition (regular taxis that do respect the law ). It's like saying employer X doesn't check if his employees are legal workers, because if he did it would be too expensive to do business. But hey, even startups got to hussle to make a good living.
The only thing that amazes me about uber (apart from its current valuation) is that the taxi industry is powerful enough to prevent the issuing of more taxi medallions, but not powerful enough to get the current laws enforced against uber. Assuming uber recognised this in advance (I don't have any evidence that they did) then this was pretty clever.
Medallions are required because cities regulate taxis prices and policies. Doing so distorts normal market forces. So medallions are a sort of conciliation prize for taxi drivers having the business model dictated. Govenment limits price, but also lowers competition to ensure they can make a profit.
Uber isn't beating some mustached villinous Taxi lobby. They are beating cities who wanted a regulated car service.
I think Uber is probably better than the status quo, but it's not fighting big business, it is big business.
Do you have a source for this? I'm only familiar with Chicago numbers, but a medallion costs $360,000[1] and the top 2% of medallion owners own FORTY ONE percent of the total[2]. 3/4 of medallions are owned by corporations who own more than 2 medallions (i.e. $720,000 in up-front investment or more).
[1] http://www.chicagobusiness.com/article/20130913/BLOGS02/1309... [2] https://img.washingtonpost.com/blogs/wonkblog/files/2014/06/...
1. http://www.nytimes.com/2015/01/08/upshot/new-york-city-taxi-...
Isn't it very similar when Uber drivers aren't allowed to compete with the taxi industry, who enjoy a government-sanctioned monopoly?
It seems to be paying off. Massachusetts, South Carolina, Texas, and Virginia have all reversed decisions which banned Uber in their jurisdictions.
Uber may additionally benefit from regulatory arbitrage, but it is not obvious that their business requires it.
I've since stopped using Uber even as a rider. The way they treat the drivers is pretty horrendous and I don't want to be an enabler to that. Lyft is a bit better because at least I can leave the driver a reasonable tip through the app.
It takes all of ... what, like 45 seconds to download Lyft? If Uber is so bad, why don't all the drivers just switch?
I don't know enough about the economics of any particular driver's situation to know how many people it works for or doesn't, but (1) believing that Uber drivers get screwed, (2) believing that, say, Lyft drivers have it much better, AND (3) recognizing that far more people choose to drive for Uber than for these other platforms, requires us to believe some rather surprising things about the subjective mental states of the many, many Uber drivers, right?
I mean: Damn, I hate my job, my company treats me terribly, and a substantially identical job is about 4 taps and 2 minutes away, and ... I guess I'll just keep working for The Man.
Why would anyone do that?
In some cities, the base fares are notably higher on Lyft, too, making more money for the drivers but driving more customers to Uber. I'm not sure about other apps (Sidecar, etc.).
But basically, the drivers can get a cheap fare fast on Uber, or they can wait longer to get a slightly better fare on Lyft.
I wonder if it's possible to stave off this issue.
Only if you believe that humans are the sort of simplified perfectly-informed stimulus-response mechanoids (and operating in a simplified-rules environment) that game theory requires. There's nothing surprising here; it's actually pretty mundane.
I don't have any and am curious - my mind might change depending on what those numbers look like. If it's all a big bait-and-switch and then you're stuck to it because you can't get out of the car you just bought, well, that's a different story than the way I've seen it to date. Anybody with info on this?
I have no problem hailing an Uber - they are really, really cheap. However, it's a raw deal for drivers. Uber turns a blind eye to driver-contractors driving without commercial vehicle insurance. It has to, as the additional cost (which is pushed onto the driver) would cause the driver's hourly rate to plummet even further. In addition, there is no way to purchase commercial insurance on an hourly basis - therefore part-time drivers would be squeezed out. The flat-rate $1 safe rides fee causes low-distance fares to be even more unprofitable, even when many short trips are already a bad deal due to the overhead involved in each pickup and drop-off.
To fix this, Uber should probably cover drivers with an on-demand commercial policy while they are logged into the app. The flat per-ride fee should go away. And while I doubt this is going to happen, Uber should probably also reduce the commission they take per ride.