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Is Uber's business model doomed?

Graham Watson

25th August 2020

This fascinating article looks at the ride-sharing market and argues that both Uber and Lyft are destined to fail.

Why? Aaron Benanav argues that the debate about the use of the gig economy and whether workers are employees or self-employed contractors is a red herring. He argues that the business plans of both companies are fundamentally flawed. He believes that the loss-leading, low cost nature of the businesses is a pre-cursor to full automation of ride-sharing, at which point the need for drivers disappears.

He suggests that both have burnt through cash in the hope of growing market share and then having a near-monopoly position and, in an automated future, no driver costs. It's not a hypothesis that I've come across before, but that doesn't mean that it's wrong.

Graham Watson

Graham Watson has taught Economics for over twenty years. He contributes to Tutor2U, reads voraciously and is interested in all aspects of Teaching and Learning.

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