Economics of Surge Pricing

This economics video looks at surge pricing. Surge pricing, also known as dynamic pricing or demand-responsive pricing, is an economic concept where prices for goods or services increase during periods of high demand. It is used extensively in ride-sharing such as Uber and Lyft, hotels, airlines, theme parks and some fast-food chains are considering a type of surge pricing with investment in digital menu boards, which allow prices to be easily changed with some prices being set by an algorithm based on the strength of demand. Will it work?