Think about it: When was the last time New Yorkers saw the price of a common city service go down?
This is just what is happening to cab fares. And it's all thanks to Uber, the innovative app that allows customers to hail a cab from their smart phones.
This week, Uber announced it was dropping fares by 20 percent for UberX cars, its bargain service. Uber says this makes an UberX ride "cheaper than a New York City taxi."
The company also released a graphic showing what this means for three different routes in New York: For example, an UberX ride from Williamsburg to the East Village will now be $15, against what Uber says is $16 for a traditional taxi.
Skeptics will note the sale is temporary. But Uber says the more people use Uber, the more likely these prices will remain in effect. The sale seems to be an effort to introduce more passengers to the service.
But the deal Uber reached this week with state authorities for a cap on its "surge pricing" model — in which prices go up during times of high demand — suggests the fare cuts may also be a response to customers who've felt gouged.
Our view is that we'd do better to let Uber set its own prices, and let riders decide if they'll pay them. Because in a real market, businesses can't just charge what they please. They're limited both by what customers are willing to pay, as well as by what competitors might charge to undercut them.
There's a lesson here for Citi Bike. The best way to ensure New Yorkers benefit from a new alternative to other forms of transportation is to let Citi Bike set its own prices — and sink or swim with the results.
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