logo

Ride-Sharing & Dynamic Pricing Model

   

Added on  2020-02-19

5 Pages1470 Words183 Views
 | 
 | 
 | 
Q1:A.A disruptive technology is a relatively new term and has no spcific and precise definition. It iscommonly known as ‘a new emerging technology that unexpectedly displaces an establishedone’(Fonseca, 2014).’ As the name suggests such a ‘disruptive’ technology often findsa place by disrupting/ disturbing the existing technology. The newertexchnology is accepted easily as it is more efficient and sometimes easy to adapt. It may not be a proven technology and may lack experience, but its newness and uniqueness finds many takers. The word was coined in 1997 in The Innovator’s Dilemma by Clayton M Christensen, a Harvard School professor. (Clayton et al., 2015)B.Since the first time this term was used in 1997, many innovations and newer technology have been termed disruptive. Some of them died as they were not applicable on wider levels, while others sustained and have nbeen used and improved over time consistently. Two prominent and successful ones include: Artificial intelligence is now finding multple users in fields as diverse as medicine, to robots. Self driven vehicles are another disruption to driver driven cars. They obviate th eneed for drivers and find applications in war ravaged areas where armymen can be saved from landmines and enemy shootings, despite being able to deliver food, weapons and other essentials to warring areas. The savings of labour involved in everyday driving and the scope for zero accident deaths is another application that is pushing this technology further. Answer 2:i.The following fare is based on start point: Deakin College (Burwood) and end point : Melbourne CBD. Fare for a Silvertop taxi ride: $37Fare for UBer X ride: $32-44Source: SilverTopTaxi:; Uber:https://www.uber.com/en-AU/fare-estimate/ii.Notice that while a simple taxi gives exact values for the fare, Uber does not do that. It gives a range because the actual fare depends on real conditions like traffic available taxis and number of people looking for taxi, and the actual idling time. This way each operator uses a different model that explains the different fares. Even when start and stop destinations are same the fare vary due to :Differences in model used. This model can be explained in terms of the determinants of demand and supply of taxis. A simple taxi operator typically uses distance an time of the day, along with car size ( perhaps) to determine fare. The model is static in nature. Uber uses dynamic pricing model that updates demand and supply on real time basis. iii.Using a simple demand supply model we have equilibrium at P* and Q*. With surpluses as shown. The efficiency is maximum as welfare = sum of producer and consumer surplus is maximised.
Ride-Sharing & Dynamic Pricing Model_1

iv.The introduction of UberX affects supply initially. As more drivers join Uber, the supply of taxis will expand. The supply curve shifts downwards. We are now lower in prices and more quantity of taxi rides in the market for tax rides. It is possible that demand also increases as people want to experiment with a new service. But it is not clear if total demand will rise or some simple taxi riders will shift to Uber. The effect on demand is thus unclear and ambiguous. The supply effect is clear and expected and that is why we talk about it.
Ride-Sharing & Dynamic Pricing Model_2

End of preview

Want to access all the pages? Upload your documents or become a member.

Related Documents