How Uber surge pricing really works

This is not that surprising– capacity is somewhat fixed in the shortrun and can really change in the longrun.  We learned this is econ101:

it appears that rather than getting more drivers on the road in the short-term, Uber’s surge pricing instead depletes drivers in adjacent areas. A price hike in one area means drivers move there, but away from another, leaving it underserved. If someone in the newly underserved area now needs a car they wait longer, or perhaps a surge price has to come into effect to get a car over there. At the end of the day the Uber system appears to be more about re-allocation of existing supply. And this raises interesting questions about which neighborhoods end up with worse service quality — those crosstown from a stadium or bars? Higher prices and better service for some means worse service quality for others.

via How Uber surge pricing really works – The Washington Post.

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