Microeconomics Essay: Ridesharing Industry In America

  • Words 673
  • Page 1
Download PDF

Essay Thesis: The industry chosen for this paper is the ridesharing economy, which falls under the gig or sharing economy. The ridesharing economy with key players such as Uber and Lyft has continually led to the decline of the conventional taxi industry. Although the public commends the sector, it has come led to economic disruptions that have caught the eyes of the government in terms of regulations. This essay presents the regulations as well as the guidelines for the city transport that were put in place in September 2019.

The analysis of the ridesharing economy concerning economics

For several years, conventional taxi services dominated the industry. The emergence of tech companies such as Uber has led to a decline of the traditional services with several people considering sharing economies products because of their low prices and convenience

Click to get a unique essay

Our writers can write you a new plagiarism-free essay on any topic

Law of Diminishing Returns

The law demands that technology function remains the same; therefore, it does not affect production. Unlike conventional industry, the law of diminishing returns does not apply because of more work results in more output in terms of revenue received by workers. Tech company drivers or contractors earn more money concerning the number of hours that they work

Resource Demand:

Resource Demand comes from the need for a product (McConnell, Brue & Flynn, 2018). Ridesharing has revolutionized the taxi services industry with continual innovation coming in daily. Some rideshare companies have resorted to allowing consumers to bid for prices among their suppliers (Taxi owners or drivers). Moreover, the new experience for college-going students who cannot afford a car has changed the way people view the taxi industry. The tech companies allow a group of students to pool resources and have can drop then to their respective institutions of learning daily. The amount of convenience brought about tech companies such as Uber and Lyft eliminates the need for people to wait for a taxi in the city streets. People can order their taxi online or using their smartphones, and once their ride arrives, the driver informs their customers. Moreover, the use of an app and tracking system enables customers to monitor the exact location and time it will take for their ride to arrive. Consequently, the tech companies have resulted in a downward fall for the demand for conventional taxis.

Marketing strategies

The primary goal of a marketing strategy is to enforce strategic plans that will ensure business sustainability and profit optimization both in the short-term and long term (McConnell, Brue & Flynn, 2018). The ridesharing industry can use market segmentation and target marketing to achieve its strategic goals. Different regions have different needs and policies that govern the sector. Some cities have increasingly started promoting the use of green energy. Consequently, tech companies have begun rolling out electric cars and bikes as an opportunistic measure for marketing. The ridesharing companies have started targeting college-going students and the young class to pool their resources to enjoy cheaper drop-off and pick-up daily.

Elasticity of Demand

The extent of responsiveness to changes in price variations forms elasticity of demand (McConnell, Brue & Flynn, 2018). Although in the tech taxi business, changes in prices do not have a significant effect on the price, customers always opt for cheaper options. The fundamental goal of tech companies is to offer more affordable mobility to its customers. However, the emergence of several tech companies in America has resulted in price wars. The most dominant method to enter and penetrate the industry is using price wars. Customers associate with the companies that offer the lowest prices, which has resulted in the high elasticity of demand. However, large corporations such as Lyft and Uber rely on their brand strategy, and slight changes in their prices have little impact on their prices.


The emergence of tech companies such as Uber has led to a decline in traditional services with several people considering sharing economies’ products because of their low prices and convenience. The industry adheres to microeconomics forces, including the law of diminishing returns, demand variable, market strategies and elasticity of demand for success. Changes in regulations affect barriers to entry in the sector.


We use cookies to give you the best experience possible. By continuing we’ll assume you board with our cookie policy.