I think the issue is that it's not those with the "greatest demand" but those with "the greatest demand and can afford higher prices" i.e. the service isn't equally available to people during surge pricing, it skews heavily towards the wealthier, "(approximately)" massively understates the significance of this.
Highest bidder would work great and allow excellent prioritization if everyone had roughly the same means. This is a bit like economist worship of the Coase Theorem--it completely falls apart when you factor in marginal utility of additional dollars to individuals at different levels of wealth.
From the fact that some wealth is unjustly acquired, it doesn't follow that we should expect everything to cost the same and be allocated by queuing.
(Later, you edited your comment)
It's a caricature to suggest that "Coase" is, to economists, a license to apply the free market to every public policy problem.
Meanwhile: you have to actually make the case that there's a distributional problem with surge pricing for Uber rides. If the alternative is no rides at all, then surge pricing makes some people --- not all of them rich --- better off while making nobody worse off.
Thanks, Albany! Well-done.
>Highest bidder would work great and allow excellent prioritization if everyone had roughly the same means.
I'm not sure why this system only works well when everyone has the same means. As the article points out, a price increase for a good or service can actually incentivize people to increase supply (people who initially decided to take the night off from driving now decide to work in order to cash in since demand is high). In other industries this can lead to more competition and innovation as well.
Sure I agree--like the guy who came up with processing debit transactions in order of dollar-amount instead of in order of transaction-time when calculating overdraft fees.. like that guy probably got a huge bonus for coming up with the scheme, and he probably didn't get the idea from his grandpa's will.
This is, unfortunately, one of the most inefficient and expensive ways to institute social reform. It is also being applied to a system for which there is also a far more regulated counterpart in the taxi system. Except, guess what? Dispatch says you won't be getting a cab for hours because they're already booked.
I'd say it skews heavily toward those with the greatest demand, as the previous post said.
If you have average financial resources and needed to get to the hospital in the middle of a snowstorm, you stood a better chance under Uber's previous model that allowed a market-clearing price. Now that some NY politicians have outlawed that process, the price that they permit will be below the market-clearing price and the likelihood of shortages will increase. Put another way, Uber drivers will (sensibly) venture out in snowstorms only if they can make significant $$$.
Hope you're well enough to walk to that hospital! Thanks, Albany!
(Note I'm not an interested party here: I own a late-model car, I don't live in NYC, and I've used Uber and similar services < 5 times this year. But someone was wrong on the Internet and clearly needed to be corrected.) :)
it also allows you to be sure that you will be able to get a taxi on New Year’s Eve
as long as you’re willing to pay extra.
Everything else being equal, say person A watches Breaking Bad for 7 hours and works for 1, having less money in pocket compared to person B who worked 8 hours that same day. Should both people have equal spending ability?