Ride-sharing markets re-equilibrate
Jonathan Hall, John J. Horton, Dan Knoepfle
Status: R&R at Journal of Economics & Management Strategy
Last updated: 2023-01
Summary
Following Uber-initiated fare increases, drivers make more money per trip and, initially, more per hour-worked. Drivers begin to work more hours. However, this increase in hours-worked—combined with a reduction in demand from a higher fare—has a business stealing effect, with drivers spending a smaller fraction of working hours transporting passengers. This market adjustment brings the hourly earnings rate back to about the rate that prevailed before the fare increase, in roughly two months. Passengers are partially compensated for higher prices by shorter wait times, but during the period covered by our data, fare increases likely reduced passenger welfare.
Paper links
Video
Coverage
Uber’s Driver Dilemma: Fare Hikes and Cuts Don’t Change Pay, Wall Street Journal Simple economics explain why driving for Uber will never be a great job, Quartz Why the ‘gig’ economy may not be the workforce of the future, AP News
Cite
@unpublished{horton2023ridesharingmarketsreequilibrate,
title = {{Ride-sharing markets re-equilibrate}},
author = {Hall, Jonathan and Horton, John J. and Knoepfle, Dan},
year = {2023},
url = {https://john-joseph-horton.com/papers/ride-sharing-markets-re-equilibrate/}
}