Uber's Pricing Strategy: Discrimination (Essay Sample)
Read the Bloomberg article:
And answer the following questions:
1. Which type of price discrimination is Uber attempting? Is it first, second or third degree? Explain.
2. What are some unintended consequences that Uber may face in attempting this type of price discrimination which may undercut the profits that it hopes to make with this practice?
Uber's Pricing Strategy
Uber's Pricing Strategy
Which type of price discrimination is Uber attempting? Is it first, second or third degree? Explain.
Price discrimination exists when a service or product is sold at different prices to different consumers or clients (Kominers, 2017). Uber company is operating a dynamic marketplace in the real world. However, Uber is embracing the personal price discrimination by charging different prices to different customers. This follows after Uber has been suspected to raise fares when the demand for rides increased impulsively. Consumers are charged the maximum price they are willing to pay which diminishes the consumer surplus. The company collates the data from consumers to make presumptions about price sensitivity. Consumers riding to and from classy neighborhoods or busy business streets are charged more. In addition, Uber is known to be reliable, hence gaining positive commentary, which supposedly points out the benefits of price discrimination.
What are some unintended consequences that Uber may face in attempting this type of price disc...
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