Impacts of Uber
Uber is a transportation company with its headquarters in SanFrancisco and operating in more than 570 cities around the world.Uber Technologies Inc. is responsible for developing, marketing, andoperating Uber car transport apps. Uber drivers use their personalcars although there is the option of renting cars to Uber. The newtransport business model introduced by Uber has had huge impacts onthe passenger transport industry with some sectors enjoying benefitswhile others incurring costs. Consumers benefit from the cheapservices offered by Uber although taxi drivers have had mixedperceptions of the model. There have been calls for regulators toallow Uber operate its business but under stricter regulations. Theobjective is to ensure that consumers and drivers reap the benefitsof the new model in the industry.
In order tounderstand the concept used by Uber, it is important to highlight theincentives of the service in the economy. Uber is reliant on thesharing economy accelerated by online platforms. A sharing economymatches individuals who would like to share asset online. Forinstance, in relation to Uber, rather than buying or renting a carfor a few hours use, an individual can use the services of someone’scars while they are not using it. Such an arrangement introducesincentives associated with efficiency, which subsequently benefit theconsumers and produces in an economy. In this respect, it isimperative to note that this model of economy has incentivesdependent on the business models that exist in a given economy. Mostof the people who derive incentives from the business modelintroduced by Uber and other similar companies as Sidecar and Lyftare riders who paid high costs of existing taxi models. On the hand,drivers also benefit on the basis that many people have opted to usethe services instead of using their cars, which increase the earningsof drivers (Cusumano 33).
The introduction ofUber services has led to discontent among many elements in theindustry. The introduction of efficiency in the market has itsrepercussions. For instance, the taxi medallions in New York City areexperiencing shrinking revenues and profits. This leads to asituation where the regulators in the interest of protecting thetraditional economy model may introduce policies that will limit theperformance of Uber to create a balance in the industry. The growthof Uber faced many demonstrations by taxi drivers in the cities itwas introduced. Courts have restricted or banned altogether theservices offered by Uber in different jurisdictions. The rationalebehind the actions against Uber by the courts is that Uber engages inunfair competition. Whereas other Uber competitors use the samebusiness model as Uber, Uber is at the center of discontent becauseof its size, growth, and impact to the regular taxi industry. Theintroduction of policies inhibiting the growth and performance ofUber may have the benefit to the traditional taxi industry. However,there are some ramifications to the introduction of such policies.One of the most notable drawback to such policies is that startupsthat introduce new business models in the economy. The effectsassociated with the introduction of such policies also haveunintended consequences. For instance, there could be the mushroomingof smaller entities whose individual effects does not reflect on themacroeconomic level but reflects on the drivers and companies such asUber that will register decreased revenues. For instance, a group offriends working in the same area may resort to using a single car forthe commuting purposes (Cannon and Summers 3).
Uber’s impact tothe economy and business models will eventually lead to other optionsintroduced in the economy. In this respect, it is imperative to notethat Taxi companies and taxi medallions will eventually realize thedisadvantageous position that they are in due to the growth of Uber.In order to maintain their position in the market, taxi companies andtaxi medallions may introduce policies that will be beneficial to theriders and drivers. Although this may result with reduced revenuesfor the companies, they will offer competitive rates for both ridersand drivers. Other options may include the intervention of regulatorybodies to ensure that both riders and drivers working for companiessuch as Uber experience an increase in their contribution to thecompany. This will put the companies and traditional sectors atlevel. This will ensure that all competitors in the industry getequal opportunities in the economy.
The introduction ofa new business model in the commuter transport sector by Uber has ledto significant impacts to the transport industry. However, it isimperative to note that the new business model has diversifiedbenefits to various players in the market including riders anddrivers. Some taxi operators have incurred losses due to theintroduction of Uber taxi services. In this respect, it is importantfor the regulation of the sector to avoid economic ramificationsaffecting the entire industry. The regulation and policies introducedand implemented should ensure that they find a level ground for faircompetition and ensure that all parties benefit from the resultantbusiness model in the industry.
Cannon, Sarah, and Lawrence H. Summers. "How Uber and thesharing economy can win over regulators." Harvard businessreview 13 (2014): 1-4.
Cusumano, Michael A. "How traditional firms must compete in thesharing economy." Communications of the ACM 58.1 (2015):32-34.
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