Odd Even rule Delhi Ola Uber surge price

Response to ‘AAP vs app’

I came across an article on Scroll titled AAP vs app: Why odd-even makes no sense but Uber’s surge pricing does“. As the tagline of the piece claims, it is supposedly an exposition on how the “App-based taxi services [in Delhi] are responding rationally to an irrational policy.”

As a person who is actually staying in Delhi (while compared to the author who apparently lives in Mumbai), I have a few responses to the article:

1. “… a denial of livelihood to employees of car rental services.”
This very premise is wrong because the Odd-Even rule doesn’t apply to taxi services. It’s only for private vehicles.

2. “If it doesn’t make sense to apply a policy for 30 days a month, I don’t see how it can make sense to do it for half that time.”
It’s called experimentation. You make a hypothesis and run an experiment. You collect the data and then make an informed decision. Every public policy should follow that order. It’s a shame that most don’t.

3. “The mechanism used by Uber and its clones is called surge pricing, supposedly an automatic matching of supply and demand.”
The operative word here is ‘supposedly’. And as the author himself concurs later on that Uber and Ola do have a lot of control over their prices. So how do we know they’re not falsely cashing in?

4. “… anybody put off by surge pricing can simply opt not to order the cab. It’s not as if Uber forces anybody to use their service.”
The whole point of the scheme this time around is to encourage public transport. And isn’t it wrong on Uber’s part as well to mis-utilise the situation to charge exorbitantly? (My friend travelled from South Delhi to Gurgaon and ended up paying Rs 2097. It would have been cheaper for her to book a flight.)

5. “Since app-based providers aren’t monopolies..”
Yeah, right. Sorry, I missed that class.
PS: I have a degree in Economics. While I understand this is not a valid argument, I hope it counts for something.

6. “This study indicates the idea works efficiently in the United States…”
First of all, the link to the study is broken. So there’s no way to verify if at all that study is genuine.
Secondly, it’s US specific. We know that the Indian market works way differently! There’s no guarantee that an economic model successful in the US will be successful here also.

And finally, there are dozens of case-studies that have proven that Uber has frequently resorted to predatory business models in crunch situations.

 

uber-1
A screenshot of Uber charging almost 5 times the normal rates using surge charge. (source)

All in all, the very tone of the article is accusatory rather than critical. There’s a very thin line between the two voices and the author certainly seems to have not seen it.

His arguments appear to be stemming more from an anti-AAP sentiment than from rational economic analysis.

I wouldn’t be too surprised if I ran through the list of his articles and found an abundance of pro-BJP or pro-INC articles.The proof of which can be found in the fact that not once has the author mentioned the Karnataka Government which has banned surge pricing much before Delhi!

You have every right to a political viewpoint. But you cannot hope to arrive at realistic conclusions if you continue to view policies through the glasses of your political prejudice.


Read more:

Why Odd-Even makes sense on MensXP.
Delhi’s odd-even rule spawns another transport app to aid commuters on The Hindustan Times.

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