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Businesses Transportation United States

Honolulu Lawmakers Pass 'Surge Pricing' Cap For Ride-Hailing Companies (reuters.com) 105

Honolulu could become the first U.S. city to limit fares ride-hailing companies can charge when demand spikes, following a city council vote on Wednesday, the Honolulu Star-Advertiser newspaper reported. From a report: Ride-hailing companies such as Uber and Lyft use a model known as "surge pricing" in which the fare for a ride rises when factors such as rush hour and bad weather increase demand for the service. The practice could be limited in the future in Hawaii's largest city after the Honolulu City Council approved by a 6-3 vote a bill requiring city officials to cap surge pricing by ride-hailing companies, the newspaper reported. For the bill to become law, however, it still needs to be signed by the Mayor Kirk Caldwell, whose administration appears to oppose the measure, Hawaiinewsnow.com reported.

Honolulu Lawmakers Pass 'Surge Pricing' Cap For Ride-Hailing Companies

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  • Supply and demand (Score:5, Insightful)

    by Anonymous Coward on Thursday June 07, 2018 @04:23AM (#56741312)

    Let's repeal that pesky law of supply and demand.

    • by saloomy ( 2817221 ) on Thursday June 07, 2018 @05:35AM (#56741432)

      Any economist worth his salt knows how to create a shortage. Fix prices. If you cap surge prices, drivers won't want to deal with all the drunks at 2 am or after the game lets out. This will result in a shortage of drivers. Sure, some people would be happy to pay them more so they could have the convenience, but the government won't let them. Shitty....

      • by ooshna ( 1654125 )

        I live in cleveland. After the parade for the Cavs after they first one the championship a trip that would cost $10 was $50

        • by cayenne8 ( 626475 ) on Thursday June 07, 2018 @08:49AM (#56742024) Homepage Journal

          I live in cleveland. After the parade for the Cavs after they first one the championship a trip that would cost $10 was $50

          I've seen this happen from time to time here in New Orleans.

          There's always something going on here, but I don't see it as a big deal.

          I've been dining and drinking downtown and was about to leave, when I see surge pricing on Uber....last time a concert had let out of the superdome I think.

          no big deal, I just sat down back and the bar and met folks, hung out, etc....generally had fun and waited 15-20 min or so, and surge pricing went back to normal again and I was on my way.

          I figure that's the "price" you pay for not driving your own car and have to wait from time to time for someone else to do it at the price I want.

          • What actually ends up happening when UberX/XL surges is that people either wait or become more willing to upgrade to Black/SUV (aka "UberLux" elsewhere), which surges far less often.

            • What actually ends up happening when UberX/XL surges is that people either wait or become more willing to upgrade to Black/SUV (aka "UberLux" elsewhere), which surges far less often.

              I dunno...I guess maybe I'm a bit of a cheapskate, but I'm not willing to pay more than maybe $2-$5 more than usual.

              And again, if I'm doing Uber, I'm likely NOT in that big a hurry or on a tight schedule. I can wait it out on a surge.

              If I were on a tight schedule or in a hurry, I'd be driving my OWN car where I am in full con

              • by tlhIngan ( 30335 )

                If I were on a tight schedule or in a hurry, I'd be driving my OWN car where I am in full control of the situation, you know?

                And if you tried that, you'd just get caught in traffic. Not because everyone else also drove (many events everyone says to take public transit, which works fairly well), but because there are just so many people walking everywhere traffic just doesn't move.

                Personally, I walk out of the area first to catch transit - because the events are located downtown, the stations are near and fe

      • by Mitreya ( 579078 )

        If you cap surge prices, drivers won't want to deal with all the drunks at 2 am

        Ah, but these are "ride-sharing" companies.
        Uber/Lyft driver doesn't know how drunk you are when you order a car.

        • If you're within stumbling distance of a bar at 2am chances are good that you are drunk. Tripley so if you are a regular user and they see your history.
          • Your correct, it would also be reflected in your score that drivers see. If you are at a 4.8 out of 5 at 2am, they know you are a considerate rider. But if you have a score of 3, they are going to not pick you up.
    • Re:Supply and demand (Score:4, Informative)

      by pgmrdlm ( 1642279 ) on Thursday June 07, 2018 @09:20AM (#56742166) Journal
      Actually, competition. Uber has been hitting me with huge surge prices at 5pm in Cleveland. for a ride during non busy hours that is 18 dollars, they were charging up to 55. I looked at Lyft, they were at 20 dollars. Uber lost my business, Lyft got it. Competition wins for the consumer every time
    • Over here in the UK we have gangs of UBER drivers sitting around waiting for the surge to kick in.
      Then they go on the app and do some work.

      We even have a name for it: "Riding the surge" because it happens all over the country.

      When they're cheap, it's Predatory Pricing [wikipedia.org], when they're surging it's a rip off.
      Better to just call a proper cab and get a fixed rate every time. They all have apps now and take card payments.
      UBER offer nothing new or innovative. They're just ripping drivers, passengers, and V
  • by CaffeinatedBacon ( 5363221 ) on Thursday June 07, 2018 @04:34AM (#56741326)
    It's not a surge price, it's the normal price. The other times are just off peak discounts.
    • Funny but true. That's how companies get around charging fees for Credit Card Purchases, they offer cash discounts instead
      • Except in places like where I live where it is illegal to give discounts for using cash, or charging more to use credit. This kind of thing (government price controls) is already done in the U.S.
        • by west ( 39918 )

          > Except in places like where I live where it is illegal to give discounts for using cash, or charging more to use credit

          The government makes it illegal to pass on the price differential between the cost to the merchant of paying in cash and paying by credit card?

          Must be nice. I'm an Apple user, could they make make it illegal to charge different amounts for different phones, too?

          Or is Visa the only buyer of legislation in town.

          (I'm hoping that this is actually a misinterpretation of *Visa* not allowing

          • by jbengt ( 874751 )

            The government makes it illegal to pass on the price differential between the cost to the merchant of paying in cash and paying by credit card?

            In my hazy memory, it is not government regulations that prevent the store from charging differently for cash or credit, it is the merchant agreement with the card issuer - except that some governments have passed laws preventing that sort of contract.
            Anyway, nowadays merchants don't mind dealing with credit cards as much as cash, except where the purchases are sma

          • If you're an Apple user, can't you afford it anyway?
            I think they do it like that to add to the exclusivity of the brand. That way it's more impressive when you show other people you don't mind paying the Apple extra.
  • by N1AK ( 864906 ) on Thursday June 07, 2018 @04:42AM (#56741340) Homepage
    It will be interesting to see what difference it makes if there is a cap implemented; though my own opinion is that one shouldn't be.

    The argument for surge pricing pretty much boils down to the idea that sellers should be able to charge whatever they think buyers will pay (thus when there is scarcity prices increase) and that the existence of surge pricing encourages sellers to operate when demand is higher increasing supply. I'm yet to be persuaded that surge pricing really makes that much difference to supply at peak times (people who want work were likely to work when their is demand, and people who weren't planning to work often won't be able to respond fast enough to benefit from surge pricing). I am comfortable with the idea that people can make huge profits by selling a scarce resource, but I can see why many people dislike that it is "profiteering" and restricting access to a relatively basic service for those with relatively low incomes.
    • by Rei ( 128717 ) on Thursday June 07, 2018 @05:00AM (#56741364) Homepage

      I think it's important to assess the social consequences of any given policy. For example, a major sporting effect (where some people drink heavily) can often cause high surge pricing. As has been shown time and time again, the higher the price of alternative modes of transportation, the more likely intoxicated people are to drive.

      If surge pricing isn't really turning out "new" supply - if it's just that the existing supply goes idle in off-peak times - then is it actually a good thing to have the price fluctuate dramatically, or would it not be better to level it out?

      • by N1AK ( 864906 )
        I agree about considering consequences of decisions, and your sporting event example is well chosen. What I'm not sure of in that example is 1) how much difference in supply of drivers would there be if surge pricing was stopped or restricted and 2) how many people who would drive when they shouldn't would move to services like Uber if they would have to pay high surge prices.

        In the UK it is quite common for taxis to operate on fixed rates. Because drivers want to be busy and earning fares you still see
        • by phayes ( 202222 )

          The "very strong reason" for meddling with ride share surge pricing that you're not seeing is the taxi companies finding a way to curb their competition by lobbying council members. As the taxis cannot benefit from surge pricing they find it unfair that anyone else should be able to do so.

          • by N1AK ( 864906 )
            I still don't see them; you seem to have confused me saying I am not in favour of market restrictions without justification, for me not understanding that others may see or invent reasons they believe/claim are important.
            • by phayes ( 202222 )

              None are so blind as those who refuse to see applies. The Taxi companies everywhere around the world have been searching for ways to outlaw and hinder the success of ride sharing as it threatens their cushy "I bought taxi medallion and want to resell this artificially scarce resource for as much money as I can in a few years" racket. Being in favor of market restrictions (or not) has nothing to do with blinding oneself to the active lobbying and sometimes outright corruption they employ.

      • Uber's soulless computers are quite okay with me only working during surge pricing. No surge dollars, drunks not worth my time. A huge fraction of Uber drivers have a surge only philosophy.

      • I think you need to examine this a little more carefully. The devil's in the details and people who advocate economic controls for social policies tend not to think much further than their pre-desired outcome and don't consider all of potential side effects.

        First, does limiting the ability to use surge pricing cause an even greater reduction in the number of rides available such that it leaves even more people to drive while intoxicated? You can't make drivers work for $0, nor can you expect any customer
        • I didn't read TFA but it sounds like that they are trying put a cap on surge pricing, not eliminating it altogether. And frankly I don't see anything wrong in it. I have at times seen surge prices equaling more than 5x of the normal fares. And that definitely hurt because app cabs have driven local cabs out of business in the city where I live; so I in fact ended up paying that as waiting wasn't an option.
          • by N1AK ( 864906 )
            How likely is it that you would have been able to find a vehicle at a normal price if surge pricing had reached a 400%+ premium? The one undoubtedly true thing about surge pricing is that it makes it easier for people willing and able to pay a premium to get quick transport by pricing out people who aren't willing or able. It seems unlikely that you'd have been easily able to have found a normal taxi quickly at a time when surge pricing is that high.
            • by jbengt ( 874751 )
              I would really like to see statistics showing how much surge pricing increases ride availability. In my opinion, cab drivers need fares to make a living, and so they will pick up rides when there's demand whether there's surge pricing or not. Sure, some cabbies will be more inclined to work when there's surge pricing, but I'm not convinced that would be enough to make a great difference, especially if it only lasts a few minutes to a half hour as said above in cayenne8's anecdote.
              • by N1AK ( 864906 )
                I would as well, although that wasn't what I was claiming. I'm saying that when demand is high then it becomes more difficult to attain a limited resource if you can't buy access by paying a premium (surge pricing). Availability might be the same with fixed rates, however if there are 10 times as many people willing to pay the fixed price then each has a 10% chance of getting a lift. With surge pricing the pool of people willing to pay falls so those willing to pay the surge rates are able to get service so
              • by Shotgun ( 30919 )

                I think you completely miss the GP's point. It doesn't increase ride availability, and does not directly intend to. It increase ride availability to those willing to pay the surge price. If at a game, concert, et. al., I will either leave early or chill while the crowd dissipates. I'm not willing to pay a surge price, or sit in a line burning my gas in the case I drove. That frees up a ride (or a place in line) for those willing to pay the price.

        • Re: (Score:2, Insightful)

          by Uberbah ( 647458 )

          I think you need to examine this a little more carefully. The devil's in the details and people who advocate economic controls for social policies tend not to think much further than their pre-desired outcome and don't consider all of potential side effects.

          Economic controls from a corrupt AF corporation vs controls from citizens is indeed a no-brainer, just not in the direction you may have been led to by years of capitalist indoctrination.

          You can't make drivers work for $0

          Good thing no one is proposing t

      • If surge pricing isn't really turning out "new" supply - if it's just that the existing supply goes idle in off-peak times - then is it actually a good thing to have the price fluctuate dramatically, or would it not be better to level it out?

        How are you going to force it to "level out"?

        If I only like to drive when things aren't crazy, I'll be glad to undercut all those guys who now try to charge higher prices to make up for their price caps during surges.

        Are you going to force me to charge a minimum price too? To make it "level out"?

        (Before you call that ridiculous, forcing people to charge a minimum price, either directly or through various manipulations, has been done many times and places, e.g. with milk. Once you start, it's hard to stop

        • by Rei ( 128717 )

          The bottom end prices will inherently rise if you limit the top-end prices. You don't have to mandate it.

    • I am comfortable with the idea that people can make huge profits by selling a scarce resource, but I can see why many people dislike that it is "profiteering" and restricting access to a relatively basic service for those with relatively low incomes.

      The people selling rides are not incredibly wealthy corporations and are often just regular schlubs. Limiting their ability to engage in free commerce is just restricting their access to make a living for themselves. The real consequence of this are that if the profitability goes down too much, people will quit to find something else to do instead and there's more restricted access to this service regardless and that sellers will find new ways to discriminate when selecting customers because they can be mor

  • Great experiment! (Score:4, Interesting)

    by misnohmer ( 1636461 ) on Thursday June 07, 2018 @05:03AM (#56741374)

    I for one hope it passes. I'm sure there are many people out there who can theorize what such a cap would do, but nothing beats real world data. So, if it passes, a few years from now if some other city tries to pass such a measure, there will be data to show what actually happened, so people won't end up being labeled as haters for arguing for or against such a law.

    • Re: (Score:1, Interesting)

      by hwihyw ( 4763935 )

      An "experiment" that's been tried a thousand times over. Cap prices below market prices and you get a shortage. Cap prices above market prices and you get a surplus. Supply & demand 101, econ 101, common sense 101, operating a lemonade stand 101.

      https://en.wikipedia.org/wiki/... [wikipedia.org]
      https://www.e-education.psu.ed... [psu.edu]

      • by Uberbah ( 647458 )

        Very clever. [youtube.com] Except the article doesn't say anything about trying to reduce the number of Uber drivers or traffic congestion, but limiting the "surge pricing" from the unlicensed taxi company.

      • Capping the prices above market does absolutely nothing - think about it, let's say we cap each ride share to one billion dollars, you think it would do anything to the market? Capping the price below market creates a shortage but when the price is purely supply limited. There are other reasons for prices to go up (monopolies, gauging, price-fixing, etc.) which are not supply driven (remember Enron?).

  • by Anonymous Coward

    It's the stupid commies interfering with Free Market again... let's see how that turns out shall we?

    Prediction: OUTLOOK NOT GOOD

  • The problem you have with legacy taxi companies is the slow incremental increases in legislation that made the industry suck. It would be a shame to see that happen to ride sharing too.

  • For fucks sake....They don't even mention it in the full article. 3x? 1.3x? 50x? There is a difference between totally ridiculous gouging and legitimate supply and demand.

    TFBill says no surge pricing at all.

    http://www4.honolulu.gov/docus... [honolulu.gov]
    "The director shall establish, by rule, the maximum fares and baggage charges that may be charged to passengers of private transportation companies. A private transportation driver or private transportation company may not charge more than the maximum fares and bag
  • That cap on surge pricing will limit supply during periods of high demand, but hey to the liberal politician's mind this is a win as it shows he cares about the little guy...

    Problem is in this case, the little guy is driving the car as well as riding in the backseat. And all they really accomplished is to inconvenience the riders by making them wait longer for service while limiting what drivers can collect during peak load.

    What would have been better is to require a service that can *notify* riders of f

  • Many of these arguments are way too narrow. It's not just a feedback loop on the day: it also determines whether a driver makes enough money, in total, to say in the ride-hailing business altogether. It's also true that a pricing regime must be perceived as stable enough to plan around in order for the policy to converge on a maximal deliberated response—against the backdrop of the larger economy which is also shifting and uncertain. (Turns out, economics is complicated. Who knew?)

    Uncertainty around t

    • by epine ( 68316 )

      Somehow I managed to paste a link in title text rather than HTML, and this after manually excising the utm_term from the URL (how is that even possible?)

      In Trump's Washington, public business increasingly handled behind closed doors [washingtonpost.com]

      [*] Somehow I suspect the utm_term is just for show anyway:

      29f9047c-54fb-11e7-ba90-f5875b7d1876_story.html

      • by epine ( 68316 )

        Mystery solved: I accidentally lopped off the closing double quote in the URL href tag. Slashdot recovered from this error fairly gracefully. My HTML to wiki script turned the bottom half of my post into %20 escape sequences. Trust Haskell to point out the error of your ways.

        I wiki my longer posts as an exercise in finding out how often I repeat myself.

        Verdict so far:
        * thematically — all the time
        * actual language and dress code — hardly ever

        Of course, you keep going

  • Legally speaking, what gives the city council the authority to set prices and price limits?

    Seriously, could a city council just decide they want to put a price floor or ceiling on anything they want? Let's say the Mayor wants to buy spam for a penny a can. Could the city council just decide spam must be sold for no more than 1 cent? Or is there any legal limit to what sorts of price controls a city can impose?

    (Yes, I know, if they did this, there would not be any spam for sale within city limits. I'm trying

    • I'm almost not sure what you're asking. Cities were the original governments, and while efforts have been made to undermine them as governments that cover wider areas have come into being, they've always had these kinds of powers. As long as they're not violating a higher law, and are working within their constitution and the constitutions that indirectly apply to them, they can do pretty much whatever they want.

      Which is as it should be. Democracy frequently works best at the local level. If the local po

  • Think of all those people making too much money and how government is directly helping them. And then there's the aspect of more people need rides and the government is helping these companies learn how to disregard them.

    Guys! This is a WIN ... WIN. Excellent.

    Creativity works everytime. Especially in states locked into the Democrat party where the state government helps people decide if they can have homes by allowing or disallowing them to have water meters. Or by helping them decide if expensive jet

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