Comment by TuringNYC | Hacker News Reader

Comment by TuringNYC | Hacker News Reader

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>> There is literally no way for a mass-market taxi service to make money unless they have a monopoly, or some unexpected disruptive technology comes along that gives one company an unassailable advantage in lowering costs.

I dont understand this comment. Traditional taxis made money for generations, why cant Uber? If anything, Uber has more advantages.

EVEN: Traditional taxis had the "rent" of medallions. Uber has the rent of Corporate HQ costs.

DRAWBACK: Uber gets raw deals in some cities because the local Taxi commission has sweetheart deals with the city (Case in point: NYC, NYC TLC, and Mayor DeBlasio: https://www.nytimes.com/2012/07/18/nyregion/de-blasio-reaps-...)

BENEFIT: More efficiency, less wasted miles w/o riders.

BENEFIT: Group rides are highly efficient.

BENEFIT: National/international scale

BENEFIT: National/international scale to get better loan rates, prices, and even self-loan to drivers.

This isnt to say they dont have to raise prices, but I dont see how they can never make money.

Taxis made money because the medallion situation limited competition, and because fare prices were fixed by the city at levels that ensured a profit.

I see your point, in theory, but the increasing medallion investment/rent just lowered profit further and further until the profit to drivers was some very low wage. The driver is not usually the medallion owner, and hence the rent for the medallion goes elsewhere. The driver just ends up with the metered fare net of medallion costs.

Similarly, Uber leads to a sort of perfect competition equilibrium (https://en.wikipedia.org/wiki/Perfect_competition) where drivers keep entering the marketplace until wages drop to some low wage, but not below that (because below that, drivers start to leave the marketplace, thus decreasing supply and increasing the equilibrium price point.)

Economically, it does lead to a competition equilibrium, but it does not take into account the cost of externalities such as additional traffic and pollution generated by having more drivers.

At appropriate saturation the number of cars being displaced by riders is significant, though I wonder what that is and how it trends over time.

If I was in college today, I might never consider buying a vehicle.

No. What happens is that roads keep becoming saturated until they are clogged with ride shares and the riders bail out when they realize they can walk faster. The equilibrium point creates complete havoc for everyone else and little productive work is actually done.

The roads are already clogged with cars. Does it matter if they are ride shares or not?

A saturated Uber-model ride share market is one where an empty car is seconds away whenever you need one. Idle ride shares matter a lot.

Or it could be a model where there is always a car with a ride share available.

I mean could it be the Uber Go model is the best win-win for the customers, Uber and the drivers?

Actually it's more like a monopsony where a single buyer (uber) can dictate the price to the sellers (drivers). Uber varies the prices it charges consumers (and therefore pays drivers) based on what maximises its profit rather than general economic welfare.

Taxis (drivers) don't make money, or rather, they are subjected to the same degree of commoditization either way.

Medallion owners make money. All of the profits are extracted into the medallions.

It's actually a bad system, really.

'Driving a taxi' is a total commodity, there's a limitless supply of people willing to do it for sub minimum wage, so the money just goes to the owners.

Rent extraction is usually a bad way to manage things; it's kind of like real-estate speculation, but there's no need for it.

It'd be nice to see the cities embrace Uber-like systems, capture the profits from it, enforce basic laws, and somehow make it fair. I'm not holding my breath.

I feel like Uber can always make money as a marketplace - but competitive pressures from other marketplaces will drive profits down. However, is there any further growth in the model? Seemingly no unless they gain monopoly.

You are making me smack my forehead to the point of giving myself a concussion. If your comment were true, market economies as a concept would be unviable. The global economy would not exist if your comment were true. Ride-sharing is a market. People compete in the market. That’s how literally every solvent business in the world operates.

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