Reply to post: market failure

The Pew 'gig economy' study is here, and it's grim

Jim84

market failure

The companies behind the apps like Uber, Lyft, and the cleaning apps like to portray themselves as online marketplaces where consumers and providers can meet.

The problem with this story is that they are not marketplaces, they are natural monopolies or duopolies. The consumers can only easily search and compare one or two apps at present. Forcing the providers (drivers) to deal with one buyer of their labour, who then sells it on at a profit. The consumers think they are getting a good deal, because Uber/Lyft etc are cheaper than taxis, but this is only because the app owners are using their market power to screw the providers.

Although the previous situation where taxi companies somewhat screwed the consumers was not satisifactory either.

Ironically, although technology is often used to get rid of a middle man matching buyers and sellers, in this case it seems to be failing.

Rather than cities like Paris and New York banning Uber, perhaps they should just require that all jobs entered into apps go into a central city run database/clearing house, which any provider can bid on. Taxi drivers will still be worse off, as there will be fewer barriers to entry in their profession, but over time that should encourage them to move to more skilled work. In the mean time Uber wouldn't be able to get rich by screwing them. If someone has the power to collect money from people, that is just a tax, but not a tax that is being invested in public services, just in silicon valley VC yachts and lifestyles. This is almost the technological equivalent of mobsters collecting protection money.

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