Demand would drop if they charged more. This would have the following potential results:
- all driver earn more per trip, but may not make more per hour since there would be fewer trips to accept
- drivers who see a drop in the number of trips will be earning less or will have to exit the market if they don't earn enough.
- only when some drivers choose to exit the market would the remaining drivers be able to earn more per trip and and accept the same number of rides per hour.
Any company following Uber's loss leading strategy at the end of the day is fomenting more liquidity in order to gauge how much more demand there is at a lower price point. That gives them a profitability target to work towards by becoming more efficient.
- all driver earn more per trip, but may not make more per hour since there would be fewer trips to accept
- drivers who see a drop in the number of trips will be earning less or will have to exit the market if they don't earn enough.
- only when some drivers choose to exit the market would the remaining drivers be able to earn more per trip and and accept the same number of rides per hour.
Any company following Uber's loss leading strategy at the end of the day is fomenting more liquidity in order to gauge how much more demand there is at a lower price point. That gives them a profitability target to work towards by becoming more efficient.