Price Controls: Uber and Surge Pricing in New York

Uber, the phone-app taxi service has had a rocky relationship with regulators over the last year. This is no surprise, since it provides a convenient, inexpensive alternative to the long-held taxi oligopolies found in major U.S. cities. The latest attempt to slow the growth of this new service comes in the form of anti-price-gouging legislation.

New York Assemblyman Felix Ortiz has proposed a ban on Uber's surge pricing. Mr. Ortiiz has two objections to Uber's surge pricing: 1) it's unfair for them to charge such high multiples of its normal prices and 2) Uber is not transparent in its pricing and doesn't tell the customer up front what price they'll have to pay for a given ride.

The problem with the Mr. Ortiz's first objection is simple. Uber is actually providing peak-load pricing in the taxi market. When demand for rides from Uber drivers increases, prices begin to increase. This is a perfectly rational response to an increase in demand and has the salutary effect of bringing more Uber drivers out to meet this increased demand.

Potpourri

David Widmar of Purdue University suggests a rising dollar could hurt ag exports in the near future.

Bryan Caplan (George Mason U) has a post about Bob Lawson's (Southern Methodist U) offer of a wager on the relationship between economic freedom and GDP growth over the next 20 years.

Michael Giberson of Texas Tech U defends the practices of "price gouging" during a disaster.

Don Boudreaux says income inequality is just not a big deal.