Rising Costs: Is Uber’s Market-Demand Pricing Ethical?

As San Francisco’s recent transit strike winds down, contract negotiations will carry on over the next month between Bay Area Rapid Transit (BART) and the employee unions. For on-demand car services such as Uber, who have gained a significant foothold in the Bay Area, strikes of this nature present a unique opportunity to capitalize on the increased demand for affordable transit. With approximately 400,000 people using the service on a daily basis, the economic impact of a transit strike within the city is significant. Yet Uber’s business practices of engaging in a market-demand pricing strategy could, by their own admission, result in “surge pricing”—a premium price placed on rides during high-demand periods.

As San Francisco’s recent transit strike winds down, contract negotiations will carry on over the next month between Bay Area Rapid Transit (BART) and the employee unions.

For on-demand car services such as Uber, who have gained a significant foothold in the Bay Area, strikes of this nature present a unique opportunity to capitalize on the increased demand for affordable transit. With approximately 400,000 people using the service on a daily basis, the economic impact of a transit strike within the city is significant. Yet Uber’s business practices of engaging in a market-demand pricing strategy could, by their own admission, result in “surge pricing”—a premium price placed on rides during high-demand periods.

Back in April, Uber’s head of Operations Ryan Graves outlined the company’s market demand pricing strategy and how it can benefit economically-depressed cities like Detroit. But for periods of high demand, such as the recent workers strike in the Bay Area, is the practice of escalating prices during periods of high demand ethical?

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