Yves here. As Hubert Horan has explained from the outset of his series on Uber, the gig worker company has an inherently higher cost structure than traditional taxi companies. Yet it’s managed to con investors and an uninquisitive financial press into believing that attaching an app to a taxi service somehow magically creates scale economies.
Uber’s pricing advantage was illusory, the product of enormous investor subsidies. We predicted that Uber would eventually have to raise prices to a higher level than traditional taxis to cover its operating costs and attempt to provide an adequate return on the massive funding of losses. That is starting to happen.
But as we also pointed out, taxi services have low barriers to entry. Expect Uber’s market share to erode as at least some riders reject the price gouging. Yet even at these higher fares, Uber is still losing money.
By Hubert Horan,