Uber's Influence On The Taxcab Industry

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”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…show more content…
Rishikant Dubey, aged 43, he mentioned that since the entry of Uber and other private cabs his customers on a day-to-day basis have reduced by 50% and his customers for long distance drives have reduced by as much as 80%. However, demand alone does not decide the price of a commodity. The joint forces of demand and supply determine the price of a commodity. Due to the demand curve sloping downward and the supply curve sloping upward, they intersect at a point on the demand/supply chart. This point dictates the average market price. In a real market, such as that of cabs in Chicago, the demand and supply of cabs constantly fluctuates. These shifts play a crucial role in determining the change in market price. Prior to Uber, the supply of Bumblebees in Chicago was fixed. This was by the medallion system. However, the demand was ever increasing due to the increasing population and other factors such as consumer behavior and circumstances. In figure 2.2, we can see that as assumed, an increase in demand results in a shift in the price upwards. The original demand curve is DD. The increase in demand is marked by the new demand curve D1D1. These curves intersect the supply curve SS at points E and E1 respectively. As seen, new price OP1 is greater than the original price OP showing the rise in
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