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Comment by apetresc | Hacker News Reader

From the article:

> Chen also said people are getting used to the surge and Uber has seen demand during peak periods drop by a much smaller amount than when it introduced the system.

Doesn't that mean that surge pricing is starting to fail? Isn't the whole point of surge pricing precisely to spread demand out so it's not all concentrated at peak times?

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Wouldn't surge pricing also increase the supply of available Uber drivers?

That was one of the stated goals but in practice it doesn't, according to some folks at Northeastern.* Uber says they're wrong, and Uber is certainly in a position to know, but I personally don't trust PR people farther than I can throw them, so who knows.

*https://www.propublica.org/article/uber-surge-pricing-may-no...

The purpose of surge pricing is to increase profits, the excuse is efficiency.

No, the purpose of surge pricing is to get more drivers out on the road. That, in turn, is to increase profits, but I'm fairly certain you could argue that pretty much anything any company does is to "increase profits"

Uber can try to optimize prices to: maximize revenue, maximize profit, or maximize volume of rides.

And there's no reason to expect that only the latter Uber has in mind.

Huh? Even by the charitable interpretation, the purpose of surge pricing is to reduce the number of drivers being requested (so that the drivers who are actually available aren't overwhelmed).

The purpose is to make supply closer match demand. If fares increase, more drivers will be willing to drive. If fares increase, less consumers will request rides.

You're correct in assuming that increased prices will reduce the number of drivers demanded. But you're wrong in assuming that the pool of available drivers remains static when prices increase.

An increase in price both reduces the quantity demanded, and increases the quantity supplied. I've personally met Uber drivers who plan their work schedules around the times when surge is highest.

I think you are missing the part where drivers get paid more during surge pricing. An increased reward entices more drivers to come out during that time.

Or motivation for drivers to deadhead to a surge area, or take a couple extra rides before taking a break/signing off the for the night.

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