So much so that places like Dehli has banned the practice. In response to these political threats Uber has started trying to educate the public about the benefits of surge pricing. Here is a "natural experiment" in Manhattan.
In the left panel, on New Year's eve 2014, there was no surge pricing (the algorithm broke down), and wait times tripled while the completion rate was cut to 25%. The right panel shows the same area of Manhattan following a Ariana Grande concert in 2015. After the concert let out, fares increased, but there was no change in wait times nor completion rates.
BOTTOM LINE: surge pricing is needed to bring in supply and allocate rides to those who want them the most. Without it, supply is too small, and rides are not allocated to their highest valued use.
(Economist article)
BOTTOM LINE: surge pricing is needed to bring in supply and allocate rides to those who want them the most. Without it, supply is too small, and rides are not allocated to their highest valued use.
(Economist article)
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