Uber vs. Taxis

Yashoda Madhusudan

Mr.Reuter

Economics A2

21 Nov 2016.

Uber Vs. Taxis.

A “Sharing Economy” is when an individual rents a property that is owned by someone else for a short amount of time. Uber is one of the company that uses “Sharing Economy”. Uber has been one of the most demanded company over the years. Uber is an app-based company that connects the passengers to the nearby Uber drivers who can drop them off to their destination.  Catching a normal taxi requires standing on the street until an available taxi driver drives by, and also we need to tell a taxi driver the directions if they are not familiar with it. But that's not the case with Uber drivers. It lets the passengers request a car from their smartphone, and they will inform you when they are outside so that you don’t have to stand there waiting for your vehicle. “Passengers pay fees through credit cards that the company keeps on file, and Uber

then takes a percentage of each fare and gives the rest to the drivers” (“The Social”).

Despite of not having to wait on the street for a cab, Uber is a better choice when it comes to price. Uber offers passengers lower price than a normal yellow cab. According to Tech Boomers, “Uber is usually a little bit cheaper than taking a traditional taxi.  In most cases, Uber fares can be up to 40% cheaper than traditional taxi fares.  In some cases, though, Uber fares can be almost double what they are for taxis, when you factor in extra costs.  This is especially true when "surge pricing" is in effect” (“Uber”). As human beings it is natural for us to look for low prices but still get a good service. Uber creates a greater consumer taste than the normal yellow cab. Compared to Yellow Cab, Uber seems to be more reliable when it comes to whether or not your taxi actually arrives. “Over 35% of all traditional taxis called from dispatch never actually make it to their pick-up point on time. With Uber, if there is no driver currently available in your immediate area, you will be informed of this. Also if you don’t feel comfortable when riding in Uber you can use the Uber app to track where the taxi is actually going”.

Not only does Uber gives you the first class service it also creates jobs for private drivers. Uber has been part of helping fight  unemployment. It has been helping people find jobs where they feel belonged. According to the fact book, Uber has been creating more than  20,000 new jobs per month. That means there are many people who can work and help them support their family. “Uber’s positive impact goes further, hundreds of thousands of entrepreneurs are using the platform to build their own small business. Resulting in a huge growth engine for cities resulting in billions of dollars being pumped into the U.S. economy”. It also makes the drivers feel safe because the company keeps all the records of who hops in and who don’t. Uber drivers also gets paid higher wages than a normal taxi driver.

Because of the quality service, the customers substitute Uber for normal taxis. Because the price of the normal taxi has increased the demand for Uber has increased then people tend to substitute Uber for YC. Therefore, substitutes have a positive cross elasticity of demand. As customers we don’t want to spend more money for less service we go for which has a better offers. Uber is also kind of a natural monopoly.  Uber started out as a normal way to schedule taxi on your Iphone. But later, due to a lower cost alternative to taxis, Uber is now often preferred by the passengers because of the expedience and also because of a better experiences.

"Uber, Airbnb and Consequences of the Sharing Economy: Research Roundup." Uber, Airbnb and Consequences of the Sharing Economy: Research Roundup. N.p., n.d. Web. 21 Nov. 2016.

@Uber. "An Uber Impact: 20,000 Jobs Created on the Uber Platform Every Month." Uber Global. N.p., 2015. Web. 21 Nov. 2016.

"How Uber And The On-Demand Economy Are Changing The Way We ..." N.p., n.d. Web. 21 Nov. 2016.

Eadicicco, Lisa. "Uber Says It's Creating 20,000 Jobs Per Month." Business Insider. Business Insider, Inc, 2014. Web. 21 Nov. 2016.

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