Preview

Uber And Lyft

Satisfactory Essays
Open Document
Open Document
548 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
Uber And Lyft
Nicole Arianne Tan
Shyamala Sethuram

Case Study 1: Prisoner's Dilemma (due: March 25).
Find an application of your own of a Prisoner's Dilemma situation. Thoroughly explain the situation: identify the players, the rules, and all the outcomes. You may simplify the example if needed (for instance, if there are n players, you can simply it to just 2 players). Include the payoff matrix, and do your best to put in real values (estimates) as payoffs. Make clear why your application is a Prisoner's Dilemma: what is the social optimal outcome, and what is the Nash Equilibrium. Suggest possibilities for (sustained) cooperation. What could be done so that the players' incentives discourage defecting?

Players: Uber and Lyft
Rules: Both companies develop, market, and operate a mobile-app-based transportation network, which allow consumers to submit a trip request to crown-sourced taxi drivers. Although Uber is the current market leader, competitors such as Lyft are now competing aggressively to get a larger share of the market. Both companies have the choice to maintain or lower their price. Uber currently charges a $2 base fare and $1.20 per mile. On the other hand, Lyft charges $1.31 as a base charge and $1.31 per mile. We are under the assumption that both companies act simultaneously and have no means of negotiating a contractual collusion. Currently, Uber’s net revenue is at $2 billion, while Lyft’s net revenue is at $300 million.
Outcomes:
Both companies are aware that:
If they decide to increase their prices and the competitor does not, consumers will flock to the other service provider and $100 million of the net revenue of the higher priced mobile app will transfer to the lower priced competitor.
If the competitor increase their prices and their company does not, consumers will flock to the other service provider and $100 million of the net revenue of the higher priced mobile app will transfer to the lower priced competitor.
If neither increases its prices, the

You May Also Find These Documents Helpful

  • Better Essays

    Supply is being affected by the cell phone carriers as well as factors of production. The contracts with the cell phone carriers influence how many phones to supply by each firm. Also, the price of producing the smart phones determines the price and amount of supply. As the demand and supply changes for smartphones, the equilibrium price is affected as well. Companies are not able to charge above the equilibrium price because they are at risk of losing consumers to the competitors. The smartphones that are in the market are very comparable and consumers do not always have brand loyalty. If they can get the same functions and abilities for less, they are likely to switch products. This has been seen a lot in the market between consumers switching between the Apple iphone and the Samsung…

    • 1708 Words
    • 7 Pages
    Better Essays
  • Better Essays

    Strategic planning requires clear comprehensive information about competitors. One of the first factors needed is knowledge of the market a firm is in and what their product is. This includes knowing their supply and demand, the competitors, potential customers, and potential buyers. Other factors include competitiveness and long-term profitability related to price elasticity, technological innovation, and cost structure. Last, this discusses the factors affecting variable costs and fixed cost and how these change supply and demand for labor. This paper will discuss such factors about Apple and the iPhone.…

    • 1713 Words
    • 7 Pages
    Better Essays
  • Powerful Essays

    Customers compare and select different providers in order to be able to decide on which place they are going to purchase a product/service from. What the customer will do is look at the provider that is offering them the best deal and value for money. Customers will be able to do this by using comparison websites like Go Compare. This is one of the most comprehensive comparison services around…

    • 3494 Words
    • 9 Pages
    Powerful Essays
  • Satisfactory Essays

    Swing vs Steady

    • 620 Words
    • 3 Pages

    Both the companies should enter the market as they are realizing additional profits by charging a lower price for the new market.…

    • 620 Words
    • 3 Pages
    Satisfactory Essays
  • Satisfactory Essays

    Two products that compete with each other for an example are Samsung phones and iPhone. IPhone is very popular phone throughout the world, the change in demand quantity has made it so their competition Samsung has to adjust their change in demand. Samsung has to lower their prices in order to sell more units compared to iPhone where they can keep their pricing the same and still cannot meet the consumers demand.…

    • 254 Words
    • 2 Pages
    Satisfactory Essays
  • Good Essays

    gain an informational edge over AP that would eventually induce higher prices for the sequel…

    • 1012 Words
    • 5 Pages
    Good Essays
  • Satisfactory Essays

    Week 4 team paper

    • 777 Words
    • 1 Page

    The Appropriate pricing strategy for your product or service and the price you will set at launch- Brenda Setting the Right Price Pricing is a key component of your corporate brand - and is the only tool in your arsenal that directly impacts your bottom line Your retail pricing strategy can make or break you with the high level of price sensitivity, competition and price transparency in todays market place. Setting the right price not only drives store traffic, sales and volume while improving margins, it reinforces your brand. Setting the wrong price puts your brand at risk (REVIONICS, 2014). There are many strategies that can be used when trying to decide what will be the correct price to set for your new product or service, and while trying to decide this you must keep in mind your target audience. Pricing can be tricky as well as difficult because you do not want to set your price to high where you will not gain a profit but then you do not want to set it to low because consumers at times judge a product or service based on its pricing. We are launching the new iPhone 6 which could be one of the most pivotal devices in the Cupertino brands history. It is a revision of the iPhone, is expected to be launched Fall of 2014, and may be priced at approximately 800-900. According to a survey of 4109 US consumers the iPhone 6 is the HYPERLINK http//changewaveresearch.com/reports/2014/smart-phone-20140403 most anticipated Apple smartphone ever, with interest HYPERLINK http//gadgets.ndtv.com/mobiles/news/iphone-6-interest-at-record-levels-thanks-to-large-screen-rumours-survey-507130 easily outstripping that of the HYPERLINK http//www.techradar.com/us/news/phone-and-communications/mobile-phones/iphone-6-release-date-news-and-rumours-1099865 iPhone 5S and iPhone 5 (Beavis McCann, 2014). The pricing strategy we will use is Prestige Pricing which is setting a rather high price to suggest high quality or high status. Some customers want the best, so they will buy at a…

    • 777 Words
    • 1 Page
    Satisfactory Essays
  • Powerful Essays

    We are presented with three possible pricing options. Option one (Exhibit B) consist of completely cloning the mobile industry as it currently exists. With an advertising budget at $60 million, it can be…

    • 1586 Words
    • 6 Pages
    Powerful Essays
  • Good Essays

    Atlantis Case

    • 798 Words
    • 4 Pages

    Workplace ApplicationAll of the scenarios and decisions demonstrated in the simulation are in applicable to TELUS. The government, or at least its agent, the CRTC, establishes price caps on incumbent service providers, but not on new entrants to the market, in order to encourage completion. This results in a somewhat complex situation, but for the most part consumers are still willing to pay more for service that is more reliable and because they are loyal to the TELUS brand. The demand curve is very steep and so price change has a very marginal effect on quantity demanded.…

    • 798 Words
    • 4 Pages
    Good Essays
  • Good Essays

    When it comes to the topic of America’s social problems, most of us will readily agree that the obesity epidemic is one of the major problems in America’s society now. Where this agreement usually ends, however, is on the question of who is responsible for this problem. Whereas some are convinced “Don’t Blame the Eater”, that the fast-food industry is responsible, other maintains that is a personal responsibility and what you eat is your business. My feeling on the issue are mixed. I do support Radley Balko’s position that it is a personal responsibility “What you eat is you business”. However I find that Radley Balko has over looked some issue on the corporation’s side and I also agree with David Zinczenko’s argument that it is corporate responsibility.…

    • 925 Words
    • 4 Pages
    Good Essays
  • Satisfactory Essays

    Discussion Questions

    • 313 Words
    • 2 Pages

    Select a product or service. Then, select three different organizations that provide your selected product or service and compare the prices associated with it. What is the difference between the prices among the different organizations? What is the rationale for this difference? The IPhone, the Verizon HTC phone, and the Windows phone are in the ballpark as far as price goes, the difference will be in the plans selected to run each phone. Each of the competitors is trying to build a better mousetrap and price out the competition. However, technology is not cheap and the cost reduction will have to occur somewhere in the manufacturing process for one company to surpass the…

    • 313 Words
    • 2 Pages
    Satisfactory Essays
  • Powerful Essays

    Market Structures

    • 1035 Words
    • 5 Pages

    Eventually, as more competitors join this type of market prices would increase until all existing companies make no profit.…

    • 1035 Words
    • 5 Pages
    Powerful Essays
  • Good Essays

    Itunes Music Pricing

    • 906 Words
    • 4 Pages

    Adopting a variable pricing policy might increase the sales revenue of Apple’s Music Store. Pricing the more popular songs at a higher price and the less popular ones at a lesser rate would generate higher sales for the lesser popular ones. Thus making up for the slight drop in sales of expensive tracks and ultimately working towards overall increased revenues. Although most songs with a higher price point experienced nearly 21 % drop in sales, the 29 % increase in price made up for the loss. Moreover, sales for the top 40 songs have a relatively inelastic demand and are expected to be unaffected by the price rise. The customers of these popular songs are price-insensitive and hence make a greater contribution to the increased revenues since the optimal price can be marked at a value much higher than the marginal cost. With the tiered pricing structure, iTunes Music Store would also be able to tackle the increasing competition by the major wireless companies offering downloadable music to the cell phone subscribers. Variable pricing intelligently supports the maximized returns by allowing the company to adjust the value of per-unit prices to increase revenues and encourage the potential customers to be allured by the lowered prices of specific tracks.…

    • 906 Words
    • 4 Pages
    Good Essays
  • Satisfactory Essays

    So what If the competitor has already captured the potential customer, there are many more people in the market yet to realize the need which is created but not actually needed.…

    • 470 Words
    • 2 Pages
    Satisfactory Essays
  • Good Essays

    Price Wars

    • 683 Words
    • 3 Pages

    In the middle of rigor competition, the company should put attention to the competitor-based method to set its price. Furthermore, the case told that low price would have a risk of causing harm to their economic bottom line. Thus, the wireless company should formulate the marketing gimmick to compensate its low price. For example, Verizon lowers its voice plans price but in the flip side Verizon eliminates the data plan bonus. In addition, JP Morgan estimates that only…

    • 683 Words
    • 3 Pages
    Good Essays

Related Topics