In De­fence of Surge Pric­ing of Cab Rides

The Economic Times - - The Edit Page -

By im­ple­ment­ing the pol­icy of or­der­ing off the roads cars with odd-num­bered li­cence plates on even dates and even­num­bered li­cence plates on odd dates, the Delhi govern­ment, in the name of com­bat­ing ve­hic­u­lar pol­lu­tion, of­fends eco­nomic sense. To com­pound the of­fence, it has now forced cab-hail­ing com­pa­nies from cal­i­brat­ing sup­ply to spik­ing de­mand with ‘surge pric­ing’, a pol­icy of rais­ing fares in times of in­creased de­mand.

Con­ges­tion pric­ing has been part of the sen­si­ble so­lu­tion for man­ag­ing traf­fic in Delhi that has been given the go-by in favour of the odd and oddly named odd-even pol­icy. Sure, it takes some tech­no­log­i­cal ca­pa­bil­ity to count the traf­fic on busy zones, com­pute a price for us­ing the road at that time that would dis­cour­age peo­ple from driv­ing their pri­vate ve­hi­cles at that time and dis­sem­i­nate the price to all those who want to know via a phone app. But In­dia has that ca­pa­bil­ity. What is miss­ing is the po­lit­i­cal will needed to de­ploy it. Surge pric­ing for taxi fares would force peo­ple to share rides or make bet­ter use of car­pools and make bet­ter use of the avail­able trans­port in­fras­truc­ture, re­duc­ing fuel con­sump­tion and pol­lu­tion. The only draw­back, it would ap­pear, is that it uses prices and the mar­ket to al­lo­cate rides and riders. Our politi­cians love to hate mar­ket forces and pre­tend that they know bet­ter. In the ab­sence of surge pric­ing, fewer peo­ple would share rides and more peo­ple would wait for sin­gle-oc­cu­pancy cabs and waste time and fuel. What the govern­ment could have done is to tell the cab-hail­ing com­pa­nies to show data that jus­ti­fies par­tic­u­lar lev­els of surge pric­ing. If an ex-post au­dit shows price goug­ing, that is, charg­ing fares in ex­cess of what was re­quired to clear the mar­ket, the op­er­a­tors could face steep fines.

Newspapers in English

Newspapers from India

© PressReader. All rights reserved.