Nov 14, 2019

Is surge pricing a fair way to manage demand?

Peak-load pricing no longer requires an army of pricing specialists. Uber's "Surge pricing" promises to end that painful three-hour wait for a taxi on New Year's Eve; there's always a price for a car right now. Consumers can feel exploited by some forms of dynamic pricing - especially when, as with Uber, prices can double or halve in a matter of minutes. Peak-load pricing is likely to play an increasing role in the economy of the future. William Vickrey was also fascinated by the possibilities offered by congestion pricing on roads, designed - just as his turnstile was - to smooth out demand and ensure limited capacity was used well.

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