Ubernomics

I hadn't really been following the rise of Uber and its competitors, nor the response of authorities until I saw this fascinating ABC story on the attempts by the Queensland authorities to crack down on the service. I was also interested in the pro and anti comments on the ABC story.

Uber is one of those fascinating examples of the disruptive effects of internet technology on existing businesses. The company obviously has deep pockets to be able to fight on so many fronts at the one time, including paying the fines of drivers in Queensland. I was also interested in this piece on Wired about the Rideshare Guy.

The economics of Uber seem to depend on the capacity to offer a lower cost guaranteed service in markets with restricted entry where regulation imposes costs on existing operators. Uber is also using a pricing algorithm, not always successfully as we saw in Sydney during the Martin Place hostage crisis, that allows it to surge prices at high demand periods.

To offer a guaranteed service,  Uber has to have sufficient cars and drivers available. As a niche service, Uber could depend on amateurs. As the service grows, it has to effectively create its own cottage industry, its own taxi service. The Wired article highlights some of the issues here.