An economic defence of surge pricing
Drivers who did not find it worthwhile to work at lower prices were willing to do so after surge pricing kicked in
The Delhi government has banned surge pricing by app-based taxi aggregator services such as Uber and Ola. Permanently lower prices benefit commuters, but they also lead to a lower number of taxis on the roads, resulting in complaints of non-availability and longer waiting times. Though a comprehensive cost-benefit analysis is only possible after analysing hard data, a simple thought experiment and some basic economic logic may provide preliminary answers.