Is surge pricing an example of price discrimination?

This flexibility strongly suggests that surge pricing increases welfare. However, the magnitude and distribution of the welfare gains are far from clear. Many critics suggest that surge pricing can hurt riders, calling it a form of price discrimination, or even price gouging (Dholakia, 2015; Crilly, 2016).



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“Prime Time, also called 'surge pricing' by Uber, is where you basically don't have enough driver supply, so you have to price it high so it can send more drivers out there and also sort of suppress demand,” Lyft CEO David Risher said on the company's most recent earnings call. “That's a bad form of price raising.

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“Prime Time, also called 'surge pricing' by Uber, is where you basically don't have enough driver supply, so you have to price it high so it can send more drivers out there and also sort of suppress demand,” Lyft CEO David Risher said on the company's most recent earnings call.

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Although this may be basic economic theory and technically not yet in illegal in the United States to institute surge pricing (though it is illegal in some countries like India), Uber can change the way so it benefits all parties involved.

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The venture capitalist Kevin Novak, an early data scientist at Uber, invented surge pricing for the ride-hailing giant.

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