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Honolulu Lawmakers Pass 'Surge Pricing' Cap For Ride-Hailing Companies (reuters.com)
Honolulu could become the first U.S. city to limit fares ride-hailing companies can charge when demand spikes, following a city council vote on Wednesday, the Honolulu Star-Advertiser newspaper reported. From a report: Ride-hailing companies such as Uber and Lyft use a model known as "surge pricing" in which the fare for a ride rises when factors such as rush hour and bad weather increase demand for the service. The practice could be limited in the future in Hawaii's largest city after the Honolulu City Council approved by a 6-3 vote a bill requiring city officials to cap surge pricing by ride-hailing companies, the newspaper reported. For the bill to become law, however, it still needs to be signed by the Mayor Kirk Caldwell, whose administration appears to oppose the measure, Hawaiinewsnow.com reported.
Let's repeal that pesky law of supply and demand.
All prices are surge prices instead.
It's not a surge price, it's the normal price. The other times are just off peak discounts.
So when the drivers don't show up to get paid what is the state of Hawaii's brilliant legislature going to do then?
It will be interesting to see what difference it makes if there is a cap implemented; though my own opinion is that one shouldn't be.
The argument for surge pricing pretty much boils down to the idea that sellers should be able to charge whatever they think buyers will pay (thus when there is scarcity prices increase) and that the existence of surge pricing encourages sellers to operate when demand is higher increasing supply. I'm yet to be persuaded that surge pricing really makes that much difference to supply at peak times (people who want work were likely to work when their is demand, and people who weren't planning to work often won't be able to respond fast enough to benefit from surge pricing). I am comfortable with the idea that people can make huge profits by selling a scarce resource, but I can see why many people dislike that it is "profiteering" and restricting access to a relatively basic service for those with relatively low incomes.
I for one hope it passes. I'm sure there are many people out there who can theorize what such a cap would do, but nothing beats real world data. So, if it passes, a few years from now if some other city tries to pass such a measure, there will be data to show what actually happened, so people won't end up being labeled as haters for arguing for or against such a law.
It's the stupid commies interfering with Free Market again... let's see how that turns out shall we?
Prediction: OUTLOOK NOT GOOD
Surge pricing increases actual supply in two ways:
1. Drivers see surge pricing available in other areas and will drive to the area to take advantage of the surge. This brings additional supply into the area of the shortage.
2. Some drivers have learned to accurately predict surge events and preposition themselves to take advantage. This also brings additional supply into the surge area.
Good on Honalulu, they have some moral direction.
I do love how on Slashdot there are thousands of geeks parrotting market mechanisms for the solution for everything without considering the consequence of those actions. And are straight up against Economic Interventionism, as they seem to think that morals have no part in markets.
Clearly the message is that when there is bad weather that increases the risk of loss to a driver, they should just park and wait it out.
Uber will just ply Hawaii state legislators with hookers and blow to override the law. They did it in Texas to override the local voter passed ordinances for fingerprint background checks. New uber, same as the old uber.
For example, a major sporting effect
what "major sporting effect" is there in hawaii? they have no professional sports teams. All the traffic in Honolulu is from commuting.
you know nothing about what you speak
The problem you have with legacy taxi companies is the slow incremental increases in legislation that made the industry suck. It would be a shame to see that happen to ride sharing too.
...from gaming the system and adding their own unofficial off the books surcharge to a fare?
Because of laws like this there are no Taxis in New York City!
For fucks sake....They don't even mention it in the full article. 3x? 1.3x? 50x? There is a difference between totally ridiculous gouging and legitimate supply and demand.
TFBill says no surge pricing at all.
http://www4.honolulu.gov/docus...
"The director shall establish, by rule, the maximum fares and baggage charges that may be charged to passengers of private transportation companies. A private transportation driver or private transportation company may not charge more than the maximum fares and baggage charges established by the director. The rules shall not allow surge pricing, as defined herein, if the increased fares and charges under the surge pricing would exceed the maximum fares or charges established by the director for normal operations. The director shall review the fares and charges at least once every two years..."
For the bill to become law, however, it still needs to be signed by the Mayor Kirk Caldwell, whose administration appears to oppose the measure
That cap on surge pricing will limit supply during periods of high demand, but hey to the liberal politician's mind this is a win as it shows he cares about the little guy...
Problem is in this case, the little guy is driving the car as well as riding in the backseat. And all they really accomplished is to inconvenience the riders by making them wait longer for service while limiting what drivers can collect during peak load.
What would have been better is to require a service that can *notify* riders of fair increases and periods of high demand as much in advance as possible so they didn't get surprised by the huge jumps or knew that if they only wait another 2 hours prices may decline. In fact, this would help both supply and demand, by notifying drivers too. Make it the service mandatory and free to all though the company's application and let users schedule their return trip and possible times with fairs being locked in when the trip is booked, not when the trip is completed.
"File to fit, pound to insert, paint to match" - Aircraft Maintenance 101
When simplistic economic models are shown to fail in the real world, the alt-facts crowd responds with downmods.
Many of these arguments are way too narrow. It's not just a feedback loop on the day: it also determines whether a driver makes enough money, in total, to say in the ride-hailing business altogether. It's also true that a pricing regime must be perceived as stable enough to plan around in order for the policy to converge on a maximal deliberated response—against the backdrop of the larger economy which is also shifting and uncertain. (Turns out, economics is complicated. Who knew?)
Uncertainty around the structure of surge pricing created by this kind of government meddling also factors into the equation.
In economics, it's very easy to construct counterfactual narratives about what choices might be made and how often, and then to suppose that some narrow observation supports one of those stories or another. This house of gas rarely survives structured measurement.
As a general rule with incentives, people are surprisingly good at organizing themselves to exploit incentive, given enough time.
There probably are people out there who would be happy to structure their lives to exploit surge pricing (mostly driving at surge times). But structuring your life is a time-consuming activity. Your wife might also need to make changes. She might have to speak with her boss, after carefully navigating her own work politics in preparation for that conversation. As comes down from history, Rome did not achieve transportation equilibrium in a day.
Where I can see a role for government is in ensuring that the ride-hailing consumer is fully informed about the surge pricing structure. Public transportation is, to some degree, a public utility. The riders should have pretty good tools to estimate their exposure to surge pricing before they step out their front door (if at all possible). Because a jerk-around-the-price-because-we-can-factor really does create a planning burden that society doesn't need.
So the government could mandate that ride-hailing services maintain a posture of data-rich predictive transparency, but leave the algorithm and its parameters in the good hands of greed. (And if the services get all proprietary about predictive transparency, then at that point their surge pricing medallion can be taken away. I'm pretty sure we'll find out at that point that Uber, too, is surprisingly good at adapting to political incentive, under necessity.
But again, this works only if the ride-hailing services believe they can't hack political necessity by sleeping with the mob—and leaving cash under the pillow. We have a name for this that no-one uses: institutional goodwill. We also have a name for the measurement of this, which everyone uses: the corruption index.
Apparently, to sample the average economics discussion, hardly anyone in society can recognize institutional equity when they see it (government sucks derf derf), but this same myopic majority sure can tell it when they don't see it (shithole-country spectrum disorder; the entire African continent lumped into a single basket-case; wealthy-nation border lice patrol).
In my view, corruption sucks, on pure systemic effects. But in order to deal with this, you have to believe government is healthy enough in the first place to endure painstaking reform. Just saying: the huge narrative out there that government isn't worth painstaking reform sure plays into to the greasy hands presently engaged in lucrative corruption circle-jerks between the virtuous private-sector Johns, and their slutty congresscritters (it's almost always such a loop; and it's almost always perceived through the primal, Edenic lens of sexual double standards). Even more to the point, at age fifty, the slutty congresscritter decides it's now time for his turn on top, and so he cashes in all his sub chits and erects his shingle in some shiny, top-corner office with a view of central park, and thus the slimy circle is made whole. Thus spoke Follow the Money 101.
These are the people who
Uber's a fucking taxi service, get over bullshit around it and make them follow the same laws the rest of the hacks have to follow.
Legally speaking, what gives the city council the authority to set prices and price limits?
Seriously, could a city council just decide they want to put a price floor or ceiling on anything they want? Let's say the Mayor wants to buy spam for a penny a can. Could the city council just decide spam must be sold for no more than 1 cent? Or is there any legal limit to what sorts of price controls a city can impose?
(Yes, I know, if they did this, there would not be any spam for sale within city limits. I'm trying to understand the legality here, not the likely outcome.)
IANAL but I'm guessing that since rights start with the people and flow upward, a city can pretty much do whatever they want, as long as it doesn't conflict with state or federal laws, or the Constitution. If none of those say a city can't restrict prices, well then they can.
This seems like a great dodge to ban items you don't want in the city: just impose an absurdly low price ceiling. You can sell all the pot you want but for no more than a penny a pound, with a $50 per ounce tax.
Think of all those people making too much money and how government is directly helping them. And then there's the aspect of more people need rides and the government is helping these companies learn how to disregard them.
... WIN. Excellent.
... I'm not the one being creative).
Guys! This is a WIN
Creativity works everytime. Especially in states locked into the Democrat party where the state government helps people decide if they can have homes by allowing or disallowing them to have water meters. Or by helping them decide if expensive jet inter-island travel is better by telling them that all ferry travel is a crime against nature. Or by disallowing non-state hospitals from starting up because those poor, poor state hospital workers can't compete (in that case I can't take credit for a creative reason, this is actually the official reason
And look how Hawaii has benefited from all this: they enjoy the highest levels of crystal meth amphetamines, drug related crimes (which are really acts of innovation and property redistribution committed by people ahead of their times), community interactions (which may be in the form of ethnic violence), and fancy products and housing (so fancy, in fact, that they are the highest prices in the nation next to San Francisco).
Shouldn't we all aspire to these things? Hopefully its just a matter of time before we all can these wonderful policies brought to our lands. I was just sooo sad when I uprooted from Maui and moved to Raleigh, NC 7 years ago.
Thank you government helpers!
Taxi pricing is unlikely to be interstate commerce (particularly in Honolulu Hawaii (an island)). So the Honolulu City Council's authority derives entirely from the Hawaii state law and probably the Revised Charter of the City and County of Honolulu 1973 (2017 Edition)
A supply shortage is created when there are more buyers at a given price point than there is product to sell. In this case, rides / riders.
A demand shortage is when there is a gut in supply given a price point. You end up with unsold inventory (drivers waiting around).
You want to move the price until you find a supply/demand balance. Anything else is a shortage of one type or another. The government of Honolulu is screwing over drivers, pushing them out of the driving pool. There will be less people incentivized to drive if you if they make less money on average. Surge pricing brings up their average so they will be more willing to drive for you on any other day.
If you don't understand the economic models, go to school. Lib-tard