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Uber’s innovative format of transportation services affects companies in the taxi market. Specifically, its pricing strategies and the ability to damage the reputation of taxi drivers deserve attention in this regard. This essay will examine the cause-and-effect connections between Uber’s activity in the transportation industry and its meaning for more traditional taxi companies.
Uber’s growth can have direct influences on taxi service providers’ success since the company emphasizes affordability and dynamic pricing. The investigations of the Uber platform’s policies based on dynamic price calculations reveal that Uber’s transportation fares are lower than those of taxis in most cases (Pepić 124). Uber offers a novel way of calculating prices, with price surges linked to the levels of demand for services and the supply of vehicles (Santos et al. 248). Its real-time algorithm adjusts prices to maintain the right balance between demand and supply, but price surges do not take away from Uber’s affordability (Pepić 124). These factors make Uber’s activity a threat to taxi companies.
The facts above produced various negative effects on taxi companies in different countries. By introducing its ride-booking application, Uber made its already low-cost services even more convenient, thus threatening traditional taxi companies’ competitiveness (BBC News Staff). Uber’s tremendous popularity severely affected the demand for traditional taxi services in the UK, which finds reflection in local cab firms’ protests against Uber’s operation in the transportation market of Oxford (BBC News Staff). Aside from citizens’ demand for traditional taxi services, Uber’s attractive prices and drivers’ proximity to clients also strengthened the marginalization of taxi drivers in the media (Phung et al.). Historically, taxi driving has been perceived as a stigmatized job, and Uber’s entry into the Canadian taxi market took that contempt to the next level (Phung et al.). It reinforced taxi users’ tendency to associate traditional taxi companies with illiterate immigrants and poor hygiene conditions, which could not go unnoticed for taxi operators’ profits (Phung et al.). Thus, Uber’s negative influences on taxi companies are reputational and financial in nature.
In summary, Uber’s price levels and an emphasis on convenience affected taxi companies’ position. The company’s success caused a decreased demand for competitors’ services while also reinforcing the target audience’s negative and discriminatory attitudes toward taxi drivers. Such effects resulted in trade unions’ attempts to reduce Uber’s market presence.
Works Cited
BBC News Staff. “Oxford Taxi Drivers Protest over Uber Arrival in City.” BBC News, 2021.
Pepić, Lana. “The Sharing Economy: Uber and Its Effect on Taxi Companies.” Acta Economica, vol. 16, no. 28, 2018, pp. 123-136.
Phung, Kam, et al. “How Uber Drivers Avoided — and Contributed to — the Fate of Taxi Drivers.” The Conversation, 2021.
Santos, Flavio Andrew do Nascimento, et al. “Dynamic Pricing and Price Fairness Perceptions: A Study of the Use of the Uber App in Travels.” Turismo: Visão e Ação, vol. 21, 2020, pp. 239-264. Web.
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