Comment by esseph
2 hours ago
> The primary purpose of surge pricing isn't to maximize profit, it's to increase supply.
Hm. This doesn't pass the sniff test for me.
If say 500 people take an Uber to a venue or need an Uber from the airport, increasing the price more often than not is just going to increase revenue. The price increase doesn't force you into an alternative choice if there are no alternatives.
Many places don't have substantial taxi or similar services, and public transit doesn't meet that same need with people in suburbs / ex-urbs / rural.
the price increase can incentivize more drivers thus increasing supply. conversely driving the price to zero would certain increase demand and eliminate supply.
i mean, if you posit inelastic demand, you dont get you pretend you derived it as a conclusion right?
> the price increase can incentivize more drivers thus increasing supply
But never high enough to meaningfully dilute or really in any way change demand, and by raising the number of drivers, the parent company ultimately still makes more profit.
This seems self reinforcing.
> i mean, if you posit inelastic demand, you dont get you pretend you derived it as a conclusion right?
I'm not pretending anything, I'm considering the reality on the ground when I travel across the US.