Taxicab System In Uber

1428 Words6 Pages
”Taxi medallions have been the best investment in America for years. Now Uber may be changing that.” Our assignment is based on this article, which centers around Uber’s revolutionary influence on the taxicab industry, once ruled by the medallion system. Taking Chicago as the subject city, the article has primarily done an in-depth analysis of the taxicab system (termed the ‘Bumblebee’ system on occasion), and analyzed its downward trajectory shortly after the advent of Uber in March 2009. The assignment branches out on the article and extrapolates on Uber’s current prestige, explaining in detail how it got there. Through demand and supply curves, a thorough inspection of the elasticity of demand for Bumblebee taxicabs has been made, which…show more content…
This garnered information is a calculated estimation, as we have interviewed bumblebees and looked for accurate figures to aid our graphs. We have also marked time on the transformation of the market structure after Uber was launched, and have also analyzed the positive impacts of Uber’s API system for their business. With this information, we have offered points on how it’s heading toward the path of monopoly. Lastly, we have explained the flip side of Uber’s inevitable destination, explaining why it shouldn’t be a monopoly, through reasons focusing on exploitation of labour and socio-economic plights of the drivers. Our entire assignment is built on the question: Why are people preferring Uber and Ola to the bumblebee taxicab system? We believe that it’s because Uber offered relatively cheaper fares and prices to that of taxicabs bound to the medallion system. Through a myriad of cost functions and demand-supply curves, we introspect the accuracy of our…show more content…
Let us assume that at this moment the supply fulfills the demand, and demand is fixed, in order to accurately see how a change in supply affects the price. In figure 2.3 we see a supply shift to the right, indicating more availability of the product and a lower price. The original supply curve SS shifts to S1S1. The demand curve DD intersects these curves at E and E1 respectively. At these points, new price OP1 is lesser than the original price OP. However, this low price is not being offered by the Bumblebees, it is being offered by the private cab apps like Uber and Ola. Therefore, large numbers of people are using these cabs instead of Bumblebees. This can be seen in figure 2.3 where at the new price OP1 a larger quantity OQ1 is required to realign the equilibrium. Figure 2.3 Just as the demand for Bumblebees has fallen, so has the demand for medallions. Technically it’s just the value of the medallion, since there are a fixed number of medallions already owned by

More about Taxicab System In Uber

Open Document