I don't buy this. Doesn't supply and demand fix this unless of course you are dealing with a monopoly and have no choice. Don't customers find the most affordable goods in the market place and aren't goods priced competitively? What am I missing?
It would be abhorrent to let humans change the prices of goods and services based on the color of your skin, age, gender, religion, etc. However, if a computer does it, that’s apparently just fine.
The article describes Uber's surge pricing as a form of surveillance pricing, but this is misleading. The primary purpose of surge pricing isn't to maximize profit, it's to increase supply. Dynamic pricing in a 2-sided network is different than in retailing.
>The primary purpose of surge pricing isn't to maximize profit, it's to increase supply.
Your thinking is overly rigid here. An action can be multiple things at the same time. Uber's incentive is to maximize transactions per unit time window. You are correct in that surge pricing on a first level pass isn't about profit maximization. You have to go up a layer of a straction or two before that becomes the case. Uber has to increase supply to fulfill transactions for a signalled demand, signalled demand is high, thus signaling more profit to be made, therefore the surge while at first seeming like a negative signal to consumers, is still acting systemically as a mechanism to bring about profit maximization.
Hiding this type of thing from the end consumer, or not saying it out loud, is a favorite of the current batch of business people.
> The primary purpose of surge pricing isn't to maximize profit, it's to increase supply.
Hm. This doesn't pass the sniff test for me.
If say 500 people take an Uber to a venue or need an Uber from the airport, increasing the price more often than not is just going to increase revenue. The price increase doesn't force you into an alternative choice if there are no alternatives.
Many places don't have substantial taxi or similar services, and public transit doesn't meet that same need with people in suburbs / ex-urbs / rural.
the price increase can incentivize more drivers thus increasing supply. conversely driving the price to zero would certain increase demand and eliminate supply.
i mean, if you posit inelastic demand, you dont get you pretend you derived it as a conclusion right?
> the price increase can incentivize more drivers thus increasing supply
But never high enough to meaningfully dilute or really in any way change demand, and by raising the number of drivers, the parent company ultimately still makes more profit.
This seems self reinforcing.
> i mean, if you posit inelastic demand, you dont get you pretend you derived it as a conclusion right?
I'm not pretending anything, I'm considering the reality on the ground when I travel across the US.
That won't work. The issue is a fundamental power imbalance being exploited by the seller. An individual will never have the time, money, or energy to be on an equal footing with companies that do this. So giving people a bunch of algorithms and data does nothing. It's just like giving people EULAs and pretending that because they have the stated terms, it somehow makes them an equal party. The solution is to ban situations where these power imbalances exist. Too bad capitalism is inherently based on them....
This is really making me consider going back to all cash and local purchases. Maybe prepaid debit cards and a PO box for when I need to order something online.
It's more important now than ever to spend an extra 2 dollars shopping locally. Your neighbors will appreciate it. Bezos will build another rocket and cut more jobs.
Agreed. I shop locally when I can. It's frustrating though that some of that stuff can't be found locally anymore. I went to 3 businesses today looking for a couple cheap car parts. Couldn't find them so ended up getting one part off eBay and then having my friend order the other with his Amazon Prime account.
But yeah, I do spend as much money at local/regional businesses as I can. And I've started donating to local charities to help my neighbors.
Based on the title, I assumed this would be about how the consumer could grasp and then counter-utilize the pricing differences these algorithms produce.
For example, understanding that you are being “targeted” by these algorithm for premium extraction and taking measures such as spinning up VPNs, clearing cache/history, etc to save the consumer from overpaying.
Seems like a good market for such a product would exist…
I don't buy this. Doesn't supply and demand fix this unless of course you are dealing with a monopoly and have no choice. Don't customers find the most affordable goods in the market place and aren't goods priced competitively? What am I missing?
It would be abhorrent to let humans change the prices of goods and services based on the color of your skin, age, gender, religion, etc. However, if a computer does it, that’s apparently just fine.
The article describes Uber's surge pricing as a form of surveillance pricing, but this is misleading. The primary purpose of surge pricing isn't to maximize profit, it's to increase supply. Dynamic pricing in a 2-sided network is different than in retailing.
It isn’t just to increase supply, it also reduces demand. It’s a mechanism for finding a new market clearing price… that necessarily maximizes profit
>The primary purpose of surge pricing isn't to maximize profit, it's to increase supply.
Your thinking is overly rigid here. An action can be multiple things at the same time. Uber's incentive is to maximize transactions per unit time window. You are correct in that surge pricing on a first level pass isn't about profit maximization. You have to go up a layer of a straction or two before that becomes the case. Uber has to increase supply to fulfill transactions for a signalled demand, signalled demand is high, thus signaling more profit to be made, therefore the surge while at first seeming like a negative signal to consumers, is still acting systemically as a mechanism to bring about profit maximization.
Hiding this type of thing from the end consumer, or not saying it out loud, is a favorite of the current batch of business people.
Can you explain why they are mutually exclusive?
> The primary purpose of surge pricing isn't to maximize profit, it's to increase supply.
Hm. This doesn't pass the sniff test for me.
If say 500 people take an Uber to a venue or need an Uber from the airport, increasing the price more often than not is just going to increase revenue. The price increase doesn't force you into an alternative choice if there are no alternatives.
Many places don't have substantial taxi or similar services, and public transit doesn't meet that same need with people in suburbs / ex-urbs / rural.
the price increase can incentivize more drivers thus increasing supply. conversely driving the price to zero would certain increase demand and eliminate supply.
i mean, if you posit inelastic demand, you dont get you pretend you derived it as a conclusion right?
> the price increase can incentivize more drivers thus increasing supply
But never high enough to meaningfully dilute or really in any way change demand, and by raising the number of drivers, the parent company ultimately still makes more profit.
This seems self reinforcing.
> i mean, if you posit inelastic demand, you dont get you pretend you derived it as a conclusion right?
I'm not pretending anything, I'm considering the reality on the ground when I travel across the US.
The solution to such information asymmetry is to mandate disclosure of all algorithms and data used in setting the price.
That won't work. The issue is a fundamental power imbalance being exploited by the seller. An individual will never have the time, money, or energy to be on an equal footing with companies that do this. So giving people a bunch of algorithms and data does nothing. It's just like giving people EULAs and pretending that because they have the stated terms, it somehow makes them an equal party. The solution is to ban situations where these power imbalances exist. Too bad capitalism is inherently based on them....
This is really making me consider going back to all cash and local purchases. Maybe prepaid debit cards and a PO box for when I need to order something online.
It's more important now than ever to spend an extra 2 dollars shopping locally. Your neighbors will appreciate it. Bezos will build another rocket and cut more jobs.
Agreed. I shop locally when I can. It's frustrating though that some of that stuff can't be found locally anymore. I went to 3 businesses today looking for a couple cheap car parts. Couldn't find them so ended up getting one part off eBay and then having my friend order the other with his Amazon Prime account.
But yeah, I do spend as much money at local/regional businesses as I can. And I've started donating to local charities to help my neighbors.
Most people don't have an extra 2 dollars.
Based on the title, I assumed this would be about how the consumer could grasp and then counter-utilize the pricing differences these algorithms produce.
For example, understanding that you are being “targeted” by these algorithm for premium extraction and taking measures such as spinning up VPNs, clearing cache/history, etc to save the consumer from overpaying.
Seems like a good market for such a product would exist…
https://m.youtube.com/watch?v=7eIUOUfhoJ8
Some day i might find the time and energy to expand keepassxc to manage fictitious identities and tie them to accounts.
Calling it the "bend you over a barrel" or "fuck you, what's it worth to you?" pricing schemes probably wasn't allowed.
It is a tone shift tho, the new leader of the NDP in Canada is using the term now.
I’m not sure that’ll help at the supermarket
This can't happen in EU. Thanks again.
"Can't"?
Dope piece.