Hacker News Reader

Comment by davidf18 | Hacker News Reader

These "barriers to entry" is called "economic rent". https://en.wikipedia.org/wiki/Economic_rent

Economic rents are harmful to the economy and keep new labor entrants out as you have pointed out making it harder for young people or others to get a job.

A way to complete with Uber and existing taxi services is to provide greener vehicles such as electric or hybrid (the new yellow taxi medallion cabs in NYC are all hybrid). Just as people are willing to pay more for organic food they probably be willing to pay for cleaner vehicles.

View on HN

I disagree completely. Uber's inception/success was partly because of existing taxi services' "barriers to entry". Medallions were worth about $1 million each when Uber started in NYC (http://bloom.bg/2aCEeQA). That's a textbook case of an economic rent.

Taxi service was often discriminatory in NYC and other cities: taxi drivers often refuse to pick up black passengers assuming they won't pay once they reach their destination and I've had gay friends openly complain about how SF cab drivers used to throw them out on Pride or after a PDA with their significant other. This was the status quo for decades because of the barriers to entry of municipal taxi services' monopoly. They never had to anything about it since their was no competition and if you didn't like it, you probably shouldn't take a cab.

Besides Uber's barriers to entry are it's scale (low prices and reliable service) and brand than de facto monopoly status (which I assume is what you're talking about since you mostly talk about competition beside summing up your link). The fact that a co-op could potentially "disrupt Uber" is evidence of that.

>> I disagree completely. Uber's inception/success was partly because of existing taxi services' "barriers to entry". Medallions were worth about $1 million each when Uber started in NYC (http://bloom.bg/2aCEeQA). That's a textbook case of an economic rent.

I live in NYC and if you look at my other posts to this article, you'll see I made the point that before Uber/Lyft the medallions went for $1.2 million.

Still, Uber/Lyft are way, way too expensive compared with other cities in USA and this is from the "legacy pricing" from the pre-Uber/Lyft days. Also, the "surge" pricing is really annoying and makes it Uber/Lyft far more expensive than taxis (they have the Arro app). I've had surge pricing on a Saturday morning! Hardly rush hour when it is raining! (I didn't use it).

>> Besides Uber's barriers to entry are it's scale (low prices and reliable service)

Uber does not have low prices in NYC. In other cities I've used it they are lower, eps. Uber-pool when it is available. Don't take my word for it. Check the Uber prices of NYC vs. Chicago or other large cities. NYC is about twice as expensive.

Most of the uber price goes to the driver. So higher prices means more money for the driver. Since NYC is a more expensive place to live, and people have more money, you have to charge higher prices to get enough drivers to drive.

Make NYC as cheap as new mexico to live in, and you will see new mexico prices.

Because of the limit on taxi medallions, the market value of a medallion was as high as $1.2 million. When drivers lease the medallion it can cost $125 per 12 hour shift or about $85,000 per year -- an amount Uber drivers don't have to pay and thus should result in much lower fares. Other US cities that are still expensive gave much lower fares.

Also there are many elderly on a fixed income that can't drive or negotiate mass transit easier.

While they're harmful to the economy, the economy really seems to favor them.

It is because special interests have a greater influence in lobbying for their good than the diffuse interests of the general population.

That's certainly part of it. But the economy rewards and enforces concentrations of power as a naturally emergent property. If you're Verizon you don't have to worry about too much about market entrance. If you create a highly demanded, new good or service then you'll quickly create all sorts of things empowering assets: market share, name recognition, and other 'incumbent powers'.

Reply on news.ycombinator.com