Consequently, the cost of a ride will approach the level of direct costs like fuel and maintenance. There won't be much left for driver compensation or vehicle depreciation, much less a durable surplus for the network operator.
Paradoxically for the disruptors, the way out of this trap is for Uber and Lyft to lobby for greater regulation, stringent requirements for insurance and liability, background checks, safety inspections and government licenses. They need higher barriers to entry.
They need to carve out a space safe from competition, or it will rapidly devolve into a lowest-common-denominator market.
Paradoxically for the disruptors, the way out of this trap is for Uber and Lyft to lobby for greater regulation, stringent requirements for insurance and liability, background checks, safety inspections and government licenses. They need higher barriers to entry.
They need to carve out a space safe from competition, or it will rapidly devolve into a lowest-common-denominator market.
Not that there's anything wrong with that.