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Comment by nostromo | Hacker News Reader

This is an unfulfilling thing to say perhaps, but price gouging is actually beneficial in producing more supply when it's needed. (So long as we're speaking about a market that is not a monopoly.)

Why else would a cab be out during a hurricane? The world doesn't owe you a cab ride during a hurricane at an everyday price.

Uber points this out in their tweet, and they are correct. So let's not get our pitchforks out just yet...

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>>Why else would a cab be out during a hurricane?

As per the line of thinking that article has. Nobody is working as hard, has worked or will ever work as hard as you do. There fore your problems are vastly bigger and demanding than everybody else. Given this the world around you automatically is obligated to help you endlessly fight your daily battles.

A part of which is that a cab driver(who probably by any means of measure is having it difficult than you) must not just report to his duty during hurricane but also should offer it at a everyday price. Now think of this, even if the cab driver had asked for the everyday price these people would have cursed them for not offering the service for free during a hurricane.

Very much so.

Similar story - last year, Olympia WA had a large snowstorm, upwards of 3-4' in 12-24 hours (which would be bad enough in most places, let alone a city without the infrastructure), and a state of emergency was declared (I'm a firefighter - had to go in and ended up working for several days straight).

My girlfriend is a nanny for two attorneys who work for the state. Their offices were closed due to the storm, and to quote the recorded message, "due to the extremely hazardous road conditions, we are closing so employees do not have to attempt the drive to work, and indeed we urge them to stay off the road".

My girlfriend's employers? "So, we'll be working from home - we were told it was too dangerous to go in due to the state of emergency, so we'll need you to be here (a 5 mile drive through mostly non-thoroughfare streets) an hour earlier to keep the (two) kids out of our hair."

Talk about a cognitive disconnect.

It's amazing the attitude even people who would swear blind, and believe, that they don't, have towards those they see as "the help".

You are absolutely correct. Controlling supply is almost always the reason for raising prices and there are some benefits to it.

Imagine a hacker news post that says, "Über isn't picking me up to take me to safety." Neither headlines are enjoyable but higher prices are better than, Über is putting my safety at risk by missing their target times.

Cabbies can also get paid more if Uber takes a smaller cut for the time being. That would have been a good PR move too. This is a bit of a wasted opportunity to get good PR.

That's exactly what they did after the flood of negative press. I live in the Lower East Side and even without the stoplights there are traffic cops directing and it is generally safe walking and driving downtown with no water and debris in the streets. Yellow cabs and black cabs are already hiking up their prices and "negotiating" with passengers so it would have been nice to see Uber step up in this case.

Some other posters have mentioned that you can't raise rates in the time of an emergency. I don't know how valid this is, or what constitutes an emergency.

Irrespective of the majority of cab money going to the corporate apparatus and not the drivers in plenty of cases, it still seems unfair to expect drivers not to raise their rates somehow just for the increased danger.

What is legal and what is ethical are two different questions. I was only speaking about what's ethical (in my view).

In NY, the governor must declare a state of emergency. This happend on Friday before the storm had hit.

Price gouging rules are often applied to "essential" goods and services. An easy way of identifying what's "essential" is to look at price elasticity. Inelastic goods are usually essential. For example, if gasoline prices double, the majority of people can't simply choose to stop using gasoline. They have no alternatives. They either stop doing what they're doing, or they buy gasoline at whatever price is asked. The actual measure of the gasoline price elasticity of demand is -0.26 over the short run [1].

In a city like NY, less than half the population owns an automobile [2], yet more than that proportion rely on transit systems [3]. I can't find a lot of recent data, but a 1999 study puts the price elasticity of demand for taxi fares at -0.22 [4]. Not surprisingly, that's very close to gasoline.

Based on that, I suspect that the demand for transit will not reduce because Uber double's their prices. Fewer people may be able to afford it, but with the transit systems down, they will have no alternative. This means that people will stop doing whatever is on the other side of that transport. In many cases, that's their job. When people stop doing their jobs, the economy shrinks. With a population the size of NY, that's not good for anyone.

1 - http://economics.about.com/od/priceelasticityofdemand/a/gaso...

2 - http://www.streetsblog.org/2011/04/06/new-yorks-car-ownershi...

3 - http://www.streetsblog.org/2010/12/21/census-data-show-more-...

4 - http://www.vtpi.org/tdm/tdm11.htm

Increasing prices don't just reduce demand. They also increase supply. Uber can't order drivers to work against their will. By increasing the price, they are making more sedans available.

I'm not really arguing that. I'm only attempting to explain why price controls are put in place.

> This is an unfulfilling thing to say perhaps, but price gouging is actually beneficial in producing more supply when it's needed.

Okay, I'll bite: how? What level of Uber price gouging will, for example, cause an unflooded subway to be constructed within the next few weeks? Maybe quadruple pricing would do it?

As Uber said in one of the tweets quoted in the linked article, by increasing the fare they increased their supply of drivers by 50%. I.e. since they were being paid more, more drivers decided to work more hours. This is the expected result from the application of basic economics. It has nothing to do with unflooding subways; just more drivers working longer hours because they want to get paid more.

That is besides the point. Why the hell should a cab driver instead of being safe with this family and that too during a hurricane drive you around for a everyday price?

The purpose of increasing the fare, is to motivate the driver to drive during the time of a hurricane. This has nothing to do with other things and was never meant to be.

There is a shortage in supply, the demand automatically increases. The only way he can prioritize his work is by offering his services to the highest bidder. He is in business earning just like us. He didn't take a oath to serve selflessly regardless of his own problems.

When the programmer salaries go high because of the demand, do you willingly take a pay cut? Why then do we apply different standards to other professions?

Correct and I agree with you - law of supply and demand etc. but lets see if Uber tries to do the right thing by limiting their benefit, or even donating their commission to a relief fund, as per AirBNB? that would be a great way to generate some positive feeling as well.

Except the hurricane is done. Uber is taking advantage of the fact that lower Manhattan is pretty inaccessible via public transportation.

But there is still a transportation shortage. This provides an accessible option for those who are willing to pay. The alternative for most people is not finding a car at all.

Just because we believe "the hurricane is done" doesn't mean it's reasonable to expect a driver to want to drive into the area for their normal rate.

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