Dynamic Pricing

Parisians Meet Taxi Capitalism

01.03.13 1:47 PM ET


A few months ago, I posted an article on CNN.com about the taxi shortage in Paris.

That piece led me to the acquaintance of Dave Ashton, who runs a start-up car service in Paris, SnapCar, which operates on the same model as Uber, a car familiar to many in Washington, New York, and other cities. Uber has arrived in Paris now too, and that led to a controversy which Ashton explains in an op-ed, excerpted below with permission:

Two days ago, on New Year's Eve 2013, a group of Parisians got a taste of capitalism in its purest form. It was perhaps a bit more than they'd bargained for.

Long accustomed to a city without enough taxis (especially on December 31st), and anxious to use one of the several alterative private car services that are now available to the public, many found that one of the companies - the American startup car service Uber - had suddenly increased its prices by more than 500% over normal rates. While everyone was still ringing in the new year, French Twitter began lighting up with stories of people paying130€ (about $175) for a short trip back home, and of prices rising as high as 13€ per kilometer with minimums of 50€ or more just to get in the car. This is about ten times the cost of a taxi, and five times Uber’s normal rates.

Many Parisians were shocked that this is legal. I was shocked that [Uber] would try to pull off a 500% price increase, because it's clearly excessive (SnapCar chose not to raise rates on our customers). But I’m not entirely sure why the behavior itself has shocked people since restaurants, golf courses, and even Electricité de France have all been doing this for years...

On New Year’s Eve 2003 in Paris, "grosso modo" people had a choice: wait 90 minutes for a taxi at normal prices or walk home in the rain. On New Year’s Eve in 2013 those same people - ten years older and more feeble - could again wait 90 minutes for a taxi. Or they could check their iPhone to see how far away their nearest chauffeur was, and decide if the cost of booking him was worth it. Or they could walk home in the rain. They had the choice, and that’s what matters most.