[johnnyg]

Another way to title this would be "Taxi Services Now 10% Cheaper Because of Uber" or more aggressively "The 10% Taxi's Used To Take Now Returned To Customers In The Form Of Lower Prices".

Of course, for those to be all the way true and fair, Uber would need to be making money and not leveraging a sea of VC money.

None the less, why is pay down immediately bad? It's only bad if it is down and things cost the same. Shouldn't purchasing power be the relevant metric?

[jpatokal]

The market for all services also expands. Previously, if I had missed the bus, I would never have called a taxi: costs too much and no certainty whatsoever that it would arrive any faster than the next bus (~30 min). Now, I will on rare occasion grab an Uber, because the cost is tolerable and it's virtually guaranteed to be at my doorstep within 5 min.

[trendia]

It goes farther than that in my opinion. I would be willing to ocassionally take an Uber Pool, which costs more than a bus but less than a taxi. That whole market (of ride sharing) did not exist previously in the US. (It has been pretty common in Turkey though)

[dx034]

And if you travel with others, an uber can often be as cheap (or even cheaper) than public transport. In London, if you travel with 4 people it's often cheaper to take an uber for many distances compared to the tube (if you don't reach your daily cap anyway). A tube ride is ~£2.5, uber can get you quite far for £10 outside of rush hours.

[ethbro]

See also: chicken bus (and in the Caribbean, their less organized cousins, the chicken-Toyota/Honda/Nissan)

https://en.m.wikipedia.org/wiki/Chicken_bus

[Spooky23]

Not really. Taxi cost doesn't directly map to driver pay.

A more accurate alternate headline would be "VCs and institutional investors contribute $10 to each Uber ride, taxi use drops"

[specialist]

Seems illegal.

https://en.wikipedia.org/wiki/Predatory_pricing

Silly me wonders if Uber will run out of cash before (enough) taxis companies go under.

[Spooky23]

That's the big bet.

The "don't look at the man behind the curtain" answer is that Uber will magically become profitable at some future date, soon, when robot taxis are invented for use on the road, Uber procures thousands of them and they take over.

[malinens]

Some will go under but some new will appear. In long-term uber like companies can't win and make monopolies as tax business is not that hard to get into

[spangry]

Indeed. In quite a few places (Australia, for instance) the taxi industry is basically a government protected cartel. State governments charge insane amounts for taxi licencing (to get their cut of the cartel rent) and then restrict supply of taxi plates (to maximise their cut). Consequently, it was recently not uncommon (in Australia) for resold taxi plates to go for mid six figure sums on the open market. It was nuts.

I think Uber has changed this, although they're basically using predatory pricing as their market strategy. I must admit I have mixed feelings about all of this... Who knows? With two anti-competitive colliding like this, maybe we'll somehow end up with a competitive market at long last...

[kafkaesq]

None the less, why is pay down immediately bad?

Because, you know, people start to suffer, can't afford to make rent or mortgage payments, take their kids out to the movies, etc. Stuff like that.

Which I know may seem kind abstract, from where you sit. So I'll point out a second major factor: As (middle class) incomes decline, do does purchasing power (in areas of the economy that really matter). And with it, the (meaningful) parts of the economy slow down greatly as well.

Note that I emphasized the "middle class" part. Yes, we know that as wages go down, the money doesn't really disappear, and is still active in other parts of the economy... namely, in the bank accounts of richer people. But by and large, richer folks tend to allocate their money towards "dumber" or less meaningful parts of the economy, dollar for dollar, while folks in the middle and lower-tiers tend to put their dollars into more fundamental sectors. Which is why when their incomes go down, everyone suffers.

It's just how things work, when you start to consider the whole system. And part of the bedrock of modern economic theory -- and one of the root causes of this thing known as The Great Depression, way back when.

It's only bad if it is down and things cost the same. Shouldn't purchasing power be the relevant metric?

When wages go down, it's not like boom, prices come down to meet them, not at the same pace anyways. (And if we're talking about a sudden wage hit to a certain class of workers -- basically you can't count on any commensurate price decrease at all to come to their rescue).

But more generally -- any analysis which only looks as one or two "metrics" -- and neglects to consider the effects on the system as a whole -- is fundamentally flawed.

[edblarney]

"Taxi Services Now 10% Cheaper Because of Uber"

No. Taxis are used less meaning less income, they not cheaper.

"The 10% Taxi's Used To Take Now Returned To Customers In The Form Of Lower Prices"

That's also not true. Uber is usually not cheaper.

The headline should be:

"More taxi drivers = less money for individual drivers"

Or economically:

"Uber uses value chain power to grab surpluses in taxi market, leaving drivers with less money on average, and consumers with the same price. But they have a cool app now."

[dajohnson89]

If you're claiming that uberx is the same price as taxis, you're wrong. Please do some cursory googling.

[edblarney]

Fair enough - but it depends on where you are, and of course what time.

[collyw]

> Another way to title this would be "Taxi Services Now 10% Cheaper Because of Uber" or more aggressively "The 10% Taxi's Used To Take Now Returned To Customers In The Form Of Lower Prices".

The article doesn't say that at all though.

Maybe the loss to taxi drivers is going straight to Uber. Maybe it's 20% cheaper to use Uber.

[lern_too_spel]

Taxi trips are down 10%, not fares.

[huhtenberg]

* Nonetheless