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Spot The Uber Arbitrage
Any time there is an "atmospheric anomaly", one of the favorite pastimes of the otherwise bored punditry is to observe just how much Uber's surge pricing will soar at any given time and place, and to respond with howls of indignation at the intersection of the supply and demand curves. Well, during today's "Blizzard of 2015", Uber's "unfair" surge pricing model will be very much impaired in the city whose mayor some say is a "radical leftist" on par with Greece's Tsipras.
From Bloomberg:
“We expect to have a serious problem on our hands,” New York City Mayor Bill de Blasio said at a press conference on Sunday. “We are facing one of the largest snowstorms in the recorded history of this city.” At 8:30 a.m. New York time, one Uber user tweeted a screen shot from his iPhone that showed Uber pricing -- which usually fluctuates based on demand -- at 2.9 times regular rates. Prices soon dropped to normal.
“Price gouging in the context of an emergency is illegal,” de Blasio said at a press conference Monday, encouraging users to report the practice to the Taxi & Limousine Commission.
Sure enough, the ratting out of Uber is doing miracles in the Nanny city, which moments ago blasted out the following:
Due to the State of Emergency declared in New York City, prices will not exceed 2.8x the normal fare.
This reflects Uber's national policy developed with New York Attorney General Schneiderman that balances the goal of reliable transportation options with affordability during disasters: Anytime a disaster or state of emergency strikes, dynamic pricing is capped and all Uber proceeds will be donated to the American Red Cross to support relief efforts. On your receipt, you will see a donation from Uber to the American Red Cross.
And indeed, a screengrab taken moments ago of the surge pricing in one of New York City's busiest regions reveals a modest 1.4x surge price hike:
However, a short trip across the river, in a different, unconstrained, city and state, reveals something quite different: the following (screengrab taken at exactly the same time as above):
How long until Goldman's correlation desk finds a way to monetize the "Uber" arb?
As a reminder, this is what Uber says about its fuzzy logic:
Uber says that simple supply and demand drive its surge-pricing algorithm, and it is seeking a patent for the technology. The company says the feature is useful to encourage drivers to respond to increased requests during peak hours, in inclement weather and on holidays.
And now Uber can also patent the "fairness" fudge factor when it comes to the most basic forces of supply and demand, courtesy of de Blasio. Sadly, like every socialist intervention in fair and efficient markets, there are immediate tradeoffs. Ubers lists these as follows:
- Higher than normal ETAs: Please be patient as demand for rides may be higher and wait times may be longer than usual
- Limited destinations: We have reminded partners of the importance of driving safely in inclement weather - in areas where there is uncleared snow, driver partners may not be able to pick up or drop off riders
Is it time yet for a "fairness" discount in the next Uber capital-raising round?
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I am from the government; and I'm here to save you.
If a taxi's meter keeps running when you are stuck in traffic for any reason, how is that not surge pricing? These bureaucrats are always trying to save us from some problem that doesn't exist.
American Governance brought to you via greed: "Look it's another new idea! Kill it now before it can steal our powers!!!"
bend over and prepare to be governed.
We can't let corporations capitalize on public emergencies, that's the gumbmts job and we created those emergencies fair and square.
So, does that mean the government raising taxes and fees in the midst of an economic crisis is also illegal?...
Oh no that's different. That's to help us.
I think this is the main reason the gov't denies there is a recession.
Because if they admit recession, they also admit that cutting taxes would boost the economy!
we HFT'd some folks
This has seemingly become ZH's very own version of "First!".
...but in a 17th kinda way
It's so 2014. Please stop.
Shovel-ready!
How long before a taxi algo battle or flash crash?
Hoping to get a cab the length of Manhatten for $0.02.
2 prices if you noticed:
so 0.000001 per mile... but minimum fare of... $300?
I dont see what the big deal is? Either you pay the fair or dont use the services. No one is making you take Uber!!
Price fixing has nothing to do with true supply and demand.
Price fixing works when the "demanders" magically decide that they are of a higher morality than the "suppliers"
The story of the Ant and the Grasshopper was all wrong, kids.. In the REAL ending, the grasshopper gets elected to public office, then surrounds himself with other grasshoppers; they then send in the grasshopper cops to confiscate the ant's savings (for the common good of all ants and grasshoppers, mind you)
The ant ends up in a mental ward- where a legion of grasshoppers try to tell him that his industrious nature is a product of mental illness... Then they medicate him into a near lobotomy-like state and applaud themselves for having saved the ant from his self-destructive productivity...
Is it considered fair to out manuver your competitor simply because your size/location makes it possible to shirk regulations designed to maintain a fair playing field?
Your argument of 'just don't use it' ignores the political, social and economic blindspots that regulation dodging fosters.
It's why trust-busting was enacted 100 yrs ago, and it'll be why multinationals face increasingly anti-competitive sanctions in the forthcoming decades.
So long as all parties involved in a transaction are doing so voluntarily, it's none of the government's business. Period.
Fairness isn't a principle; it doesn't exist in nature. If govt claims to make something fair, it's only saying so to elicit public support for expanding it's own power, influence, and wealth. It's propaganda and a lie. Govt knows it and doesn't care because it works so well to manipulate ignorant and envious people whom embrace the concept of fairness as either a warm, fuzzy, and stupid sentiment, or as a rationalization to harm those they resent.
If a govt pursues fairness, it will spend all of it's economy's resources and only come close when everyone is running around homeless, starving, and naked. The fairest entities on the planet (but still unfair) are likely ant and termite colonies--neither of which provide an environment that appeals to me. That's how we'll live as we approach govt-imposed fairness.
In the interest of accuracy, Harry, beehives. You forgot beehives. 'Cause every beehive has a queen. Wouldn't be fair otherwise.
Fool. Regulations are designed to protect the politically-connected in a monopoly arrangement funded by campaign contributions. Your safety is not a concern.
You probably actually think all those bad Uber drivers were not sent by union cabbies to make Uber seem dangerous, don't you?
http://www.wsj.com/articles/californias-scrambled-eggs-1422232494
...but there is "no inflation".
LOL! The history of the world, especially with respect to centrallized control and power, is very clear on just how fast things can get out of control. The former soviets know just how fast "markets" can go from "low prices" to shortages while Germans know how fast you can go from "low prices" to barter and "burning money to kind warm because it's cheaper than wood or coal"...
The Californian Govt, in its infinite wisdom, has mandated that chickens supplying the eggs have room to stretch their wings without hitting another chicken. Inflation is not to blame for this price increase (at least, not all of it!)
Supply/demand monopoly etc
If you want to pay the rate, WTF business is it of nanny govt?
So, the uber guy turns it off, asks you where you want to go and says "$50, take it or leave it". Done. Free market wins again
Hoorays! You're all saved! Now you'll never pay more than the capped price and... no one will fucking show up so you'll freeze outside.
Suckerz
Uber and Tindr will soon merge, and young co-eds will be paying for rides with sexual favours.
2.8x the felatio if the weather is bad.
will there be any touching of the ham wallet?
Touch yes. Insertion of bills ($20 or higher), yes, but only with 2 fingers.
"Uber and Tindr will soon merge...."
.....yes, they will call it "Tuber", and you pay in potatoes. Sexual favors are extra, and gives a whole new meaning to "the French Fry"......
Gawd, I hate the "price-gouging" warriors. It's like bragging about your own stupidity.
So... if government doesn't like surge-pricing as driver motivation, I guess they'll have to demand that they have to drive 24/7.
The fare is $1.00 a mile.
Tips are $10.00 a mile.
You'll need to buy the drive a bottle of this specific brand water before boarding. Water has a cost of $20.00 per bottle.
Every New Years Eve around here there are religious groups that will drive you home for free until about 3 am (bars close at 2). Donations VERY encouraged, along with listening to whatever group propaganda they talk about as they drive you home.
But, it beats the hell out of a DWI.
Heaven forbid you should be spectacularly ill just before reaching your destination.
fuck UBER
Central planning = Fascism
That is hillarious..Uber and Tindr merge lol but probably true!
Higher than normal ETAs & Limited destinations -> that's what makes toilet paper shortage in every country near you!
Uber should just say they are closed during bad weather and if you are stranded without a ride blame the Mayor.
How much of the surge pricing does the driver get to keep?
Fuck Uber and the insanity of their pricing structure. For doing almost nothing they get 20% of the fare, $10 for the App the driver uses, plus the sales tax, and black car fee. Uber should get 5% of the fare since the driver is taking all the risk and using their own vehicle.
Once you take all expenses into account an Uber driver is likely to make around $12 an hour and that is before taxes. Then you have the insurance and tax issues once the IRS and your insurance company find out you have been using your car for business purposes. You would really want to write off your Uber miles, but that opens you up for a fun time once your 1099 gets added to your other income if Uber isn't your only job.
In the end an Uber driver gets screwed and some asshat who made an app makes out like a bandit.
...because someone is forcing you at gunpoint to use an Uber driver, right?
Nation of iPhone-addicted pussies...
When did a bunch socialist economically -illiterate jackholes take over ZH? If you don't like it don't use it. Go back to Venezuela and fight over price-controlled toilet paper.
What the hell has happened to us? Snow in the middle of winter is now an emergency?
Friends don't let friends UBER.