[bertan]

If you would like to listen to an entertaining version of the paper, here it is: http://freakonomics.com/podcast/uber-economists-dream/

[mathattack]

Interesting that this is from the author of Freakonomics. This contains a very popular pro-Uber conclusion:

Inelastic demand translates into large consumer surplus estimates: roughly $2.88 billion dollars in 2015 for the four cities in our sample, or $6.76 billion if extrapolated to all UberX trips in the U.S. for that year. This estimate of consumer surplus is two times larger than the revenues received by driver-partners and six times greater than the revenue captured by Uber after the driver-partner’s share is removed.

This certainly puts a different spin on accusations of price gouging with surge fees.

(Note: I have no affiliation to Uber, though I am a big fan of the service)

[notahacker]

It's a different spin, but 'price gouging" is by definition extracting consumer surplus from those willing to pay more if necessary. The other way of spinning those figures is that if consumers spend $1 for every $2.60 they're willing to spend on Uber then Uber rides is doing an unusually efficient job of revenue maximization compared with most other businesses, particularly considering a large part of their brand value is being perceived as relatively cheap.

That's particularly the case when you consider that consumer surplus is also Uber's competitive moat against potential new entrants to the market that couldn't compete with Uber on price; as the paper's author's point out it's a short run consumer surplus and the long run demand elasticity is likely to be much lower.