Post-Sandy Price Gouging by Uber?: Econ 101, in Twitter Form

Mass transit is shut down in New York City thanks to Really Big Rainstorm Sandy, and getting around town is much tougher than usual. Luckily, Uber—a cool service that lets people summon black cars from their smartphones—is up and running. The company always uses variable pricing, which means that at times when demand is high, like New Year's Eve, you pay more for a car. The company instituted "surge pricing" in the city today since demand is unusually high.

Users complained about the price bump, accusing the company of "price gouging," but Uber responded with some sensible economics.

And Uber is not alone in dropping some Econ 101 on the storm weary populace. The Wall Street Journal asked readers to "Hug a Price Gouger" this morning. Heck, even generally lefty blogger Matt Yglesias went on the record with his "Case for Price Gouging" during storms as a way to allocate resources. 

But then Uber backed down. Here's the rest of that exchange:

In an email to TechCrunch, which also grabbed the tweets above, the CEO of Uber said the company would still be doubling drivers' fees, just not fares.

“There are huge losses for the business in doing this initiative, but will do it as long as we can today while we figure out more sustainable ways to keep supply up while the city is in need.”

But raising prices is the sustainable way to keep supply up. Uber knows this. Uber's whole model is built on this insight. What a shame that they think good P.R. requires them to deny basic economic fact.

That said, you can't blame the company for choosing not to fight this fight. They've had a rough year. The New York taxi cartel has done its darnedest to put the squeeze on Uber, which operates in 20 cities, including blocking the part of their service that allowed users to hail yellow cabs as well as the black for-hire private cars. D.C. has tried similar crackdowns on the black car service. But as Reason TV producer Jim Epstein learned the hard way, the D.C. taxi commission doesn't mess around:

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  • R C Dean||

    [Makes mental note not to use Uber next time I am in NYC.]

  • SugarFree||

    Aw, c'mon... we all have to make concessions for the economically ignorant everyday.

  • R C Dean||

    If by "make concessions for" you mean "lighten the wallets of", I would agree.

  • ||

    Government-supported monopolies are so awesome! Those evil capitalists shouldn't be allowed to leave home without state approval, much less operate a car-for-hire enterprise.

  • R C Dean||

    Sweet! Now Iowa is telling the tranzi election "monitors" they have to comply with Iowa law or risk arrest.

    http://www.politico.com/news/s.....83108.html

  • ||

    Why the fuck are we even a member of that group? Jesus fucking Christ, our government is becoming more ludicrous each day.

  • Enough About Palin||

    The Organization for Security and Co-operation in Europe is monitoring our elections because we are still part of the British empire.

    "The United States, like all countries in the OSCE, has an obligation to invite ODIHR observers to observe its elections.”"

    Texas, isn't the US and therefore not a signatory.

  • ||

    Ha, that's funny, because that would imply federalism still applies. Actually, that's not funny -- it's sad.

  • R C Dean||

    Well, the OSCE tranzis are free to observe our elections from a safe distance of 100 - 300 feet (depending on the state).

    So its all good, right?

  • $park¥||

    Maybe they just want to see what a rigged election looks like in America, for posterity.

  • ||

    Our most fucked-up, mishandled election doesn't even begin to rival the degree to which theirs are rigged and unfair. Limeys, Spaniards, and Greeks are particularly awful at this sort of shit.

  • $park¥||

    So they just want to see the quaint Americans.

  • R C Dean||

    Then they should be going to Philly and Chicago, maybe Milwaukee, not Houston.

  • Loki||

    But "voteing irregularities" never happen in any democrap strongholds. Nope, it's those evul rethuglicunts that steal elections.

  • Loki||

    They want to take notes so they'll know the right way to do it.

  • ||

  • ||

  • ||

    It approached "LUDICROUS SPEED" quite some time ago, RPA. I postulate at the time the 17th amendment was ratified, in fact.

  • ||

    I'd go with the Sixteenth, but yeah, the Seventeenth guaranteed Peak Retard was achievable, and now we're fulfilling that potential.

  • Loki||

    Sadly there is no such thing as Peak Retard. Human stupidity is the world's only infinite resource.

  • ||

    Surely there's a point at which we all just start drooling on ourselves and become extinct.

  • Loki||

    As soon as they introduce the Pax to the air processors.

  • $park¥||

    Mother Gaia approves.

  • ||

    “There are huge losses for the business in doing this initiative, but will do it as long as we can today while we figure out more sustainable ways to keep supply up while the city is in need.”

    One would hope a CEO's email to a news site would have better proofreading...

  • $park¥||

    It's actually correct grammar if you leave in the implied "the business".

  • ||

    That sentence--he didn't proofread it.

  • ||

    That sentence-- You didn't write that. Someone else did that.

  • $park¥||

    “There are huge losses for the business in doing this initiative, but the business will do it as long as we can today while we figure out more sustainable ways to keep supply up while the city is in need.”

    Maybe I'm wrong, but I'm pretty sure it is grammatically fine to leave out the second instance of a noun when it can be implied.

  • The Hammer||

    It is if you replace it with a pronoun, although what he probably left out was "We."

  • R C Dean||

    Not sure. I think you're OK so long as the clause following the "but" has the same subject as the preceding clause ("We are totally screwed, but will carry on anyway"), but that isn't the case in that dog's breakfast of a sentence.

  • $park¥||

    Well, it reads perfectly fine to me. I guess that's why I'm not some fancy pants lawyer.

  • Enough About Palin||

    As someone who works for the propaganda arm of a multi-billion dollar company, I can assure you of two things:

    The CEO didn't write a word of it.

    He read the final draft and said okay.

  • ||

    that dog's breakfast of a sentence.

    LOL, must be a Texan phrase.

  • ||

    When the fuck's Texas legalizing open carry, damn it?

  • R C Dean||

    I haven't heard anyone pushing for open carry, so I would say not for another couple years, anyway.

    Still, the Lege is convening for its brief biennial session in January, so it could happen next year. There's no telling what those guys will do.

  • SugarFree||

    It's a Britishism.

  • Zeb||

    I think you are wrong. If "the business" were the subject, it would work, but it is part of a prepositional phrase. You need at least a pronoun there. Where he went wrong was using the passive voice. And I'm not one of those people who thinks you should never use passive voice.

  • NoVAHockey||

    Now I've seen everything. A Yglesias article I could read from start to finish

  • Cliché Bandit||

    I call Chicken Shits.

    And I want Google to follow through on its threat to stop indexing French news sites. One day, we will need the Ellis Wyats and Francisco D'Anconias to go on strike...unfortunately we don't have very principled people in those positions typically.

  • ||

    http://reason.com/24-7/2012/10.....-of-googl#

    Yeah, me, too. Tell them to fuck off, Google.

  • ||

    Here's the highest-rated comment at the article:

    Anonymous Coward

    Re: Profit != Turnover

    Since Google seems to be so tragically unprofitable in the United Kingdom and France, perhaps we should do the kindest thing for them and nationalise their European divisions, fire all the executives (if they're unable to turn a profit on 1.4 billion turnover they're obviously incompetent) and run it as a public company until it can return to profitability. At which point, if Google asks nicely, we'll sell it back to them. How about it, Google?

  • Fist of Etiquette||

    It's not a business' business to educate ignorant consumers. (Unless that's their business.) If Uber thinks the P.R. goodwill has value and makes business sense, more power to them.

  • Bee Tagger||

    Avoiding a PR nightmare also has value.

  • Voros McCracken||

    I think the comment was that it's more sad that doing so actually would be good P.R.

    IE, wouldn't it be nice if adjusting prices due to supply and demand was seen as no big deal.

  • Fist of Etiquette||

    No. You will not take away my righteous indignation.

  • Zeb||

    Nah. People will always be annoyed by price increases.

  • The Late P Brooks||

    Reality is harsh, dude.

  • Tim||

    Now people will start bitching about waiting too long for a car.

  • RPR2||

    best to just charge Frank Denbow the normal rate with no supply.

  • Adam330||

    DC authorized a $15 surcharge during the hurricane. But clearly that was not price gouging because the Government approved it.

  • $park¥||

    See they didn't change the price, they added a surcharge. Those clearly aren't the same thing. If Uber had doubled the price but called the extra a "temporary operating expense" people probably wouldn't have thought anything of it.

  • Loki||

    THIS IS WHAT "PROGRESSIVES" ACTUALLY BELIEVE.

  • ||

    We had a Uhaul come thru our neighborhood selling 4000Watt Generators for $800. People were lining up to buy them

  • Cyto||

    Yesterday Mayor Bloomberg announced that because of the shutdown of the New York mass transit system, he's waving the restrictions on taxis and car services. That means that taxis will be able to pick up multiple passengers, and car services will be able to pick up people hailing them on the street.

    But he does make sure to emphasize that people have to be careful to only use appropriately licensed cars and taxis. Even with the complete shutdown of the subway and millions of commuters without a way to work, we gotta be sure to protect our incumbent taxis from any "pirate" competitors.

    How completely unaware are these people?

  • Zeb||

    What the hell is Uber?

    And it really was a hurricane.

  • ||

    It's a company and mobile application that finds and hails taxis for people. Limos too, some places. Various cities have found this convenience too dangerous for their citizenry.

  • tagtann||

    Anyone caught price gouging should be hung in public! Off with their heads!

    www.io-anon.tk

  • LibertyInfusion||

    Man...I just wrote about this on the 28th on my blog. Of course, my readership is teeny tiny, and not near as eloquent. But I am glad to be on the same page as Reason on this issue. Search libertyinfusion on Google for my why price gouging works.

  • ||

    There's a Learn Liberty video that explains it really well: http://www.youtube.com/watch?v=h9QEkw6_O6w

  • Graphite||

    One of the great things about Uber is how it causes regulation-happy busybodies' heads to explode: http://pandodaily.com/2012/10/24/travis-shrugged/

  • Jason S.||

    The citizen media booster, Dan Gillmor, also thinks uber was wrong. Says they got a "civics lesson". I wonder what he thought of Yglesias' piece? Interesting post.

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