Have you ever stood in the rain on Bowery in Manhattan at two thirty in the morning trying to flag down a cab in NYC? Would you pay 80% more money to have an Uber pick you up and get you uptown sooner than later?
The New York Cities long lived livery system has transported its residents since the beginning. Since 1937 it has morphed into a billion dollar business. According to the NY Daily News some 13,600 taxi medallions (taxi licenses) exist today worth as much as a million and a half dollars each. A gold mine for years for those who own them. Some owned individually, others by companies who own multiple medallions and lease them to drivers/operators, a private equity firms is the biggest medallion player. The market tied up with this control system by a limited few. It worked at least for those making the money thought it did. Until ride share swooped in.
Enter Uber/Lyft taxi patronage has declined significantly since 2011 due to competition form this new ride share phenomenon. Get on the app request a ride and there it is, no more waving and whistling and standing in the rain. Business Insider reported that medallion prices plummeted nearly 77% for the first time in years you could purchase one for less than half a million dollars. Rider ship has continued to decline since 2014.
You pay for the service though, no matter what cab you were able to flag down after standing in the rain on Bowery it was going to cost the same amount of money per 1/4 mile to get home. Call an Uber and pay as much as 80% more for the service depending on the time of day, year, weather, or holiday. Rider ship has fallen but taxi companies still hold the majority. Uber's seven billion a year is all about demand and people willing pay not to wait, for the connivance of getting home now.
I believe my demand curve illustrates what you could pay with an Uber ride at two am compared to one pm. You pay for that kind of service, wait in the rain for a cab or take the long walk. What are you willing to give up.
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