Quotation of the Day…

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… is from page 289 of my Mercatus Center colleague – and GMU Econ alum – Liya Palagashvili’s excellent 2024 paper “Dynamic Pricing Can Benefit Consumers,” which is chapter 24 in The War on Prices: How Popular Misconceptions About Inflation, Prices, and Value Create Bad Policy (Ryan A. Bourne, ed., 2024) [footnote deleted; link added]:

Consumers benefit most from dynamic pricing in ride-sharing services. Economist Juan Camilo Castillo, analyzing data from Uber in Houston during the spring of 2017, found that consumers are significantly better off under dynamic pricing relative to static pricing in ridesharing because surge pricing allows riders who highly value their time (e.g., they need to be punctual for an appointment or to catch their flight) to be picked up more quickly. Customers who don’t put as high a premium on their time can always wait until surge diminishes or take another form of transport. Under static pricing, only riders who are lucky to be near a driver get a ride, irrespective of how much they value it.