Government’s intrusion in curbing the Surge Pricing is justifying their capabilities or just null phenomena: An impact on the aggregators

Surge pricing is a very clicking word now days that we have noticed, media discussion and govt. debates etc. have ignited an immense argument, whether this surge pricing is right or wrong? Karnataka and Delhi state govt. has taken an initiate to regularise and to curb the surge pricing in the state (Arvind Gupta 2016) Every stakeholder has different opinions about surge pricing, whether it is govt., cab aggregators or commuters. So basically, the theory of surge is based on demand and supply and apparently the traits involved in identifying the process and the approach towards influencing and rationalising the surge process. The discussion or argument here is to perceive the role of govt. towards surge pricing. The govt. has taken severe steps towards this matter. 

According to some cab aggregators the surge pricing comes into effect when the demand is higher than the supply of drivers. So this increased price acts as an incentive for the cab drivers and that encourage them to stay online whenever there is scarcity of cabs most of the times it happens at the peak hours or due to bad Weather conditions. 

Govt. should intervene not only to uphold but also to resolve the issue of transparent pricing, and should acclaim it as wicked problem or a free market phenomenon (Arvind Gupta 2016). This phenomenon is based on certain traits which depict the role of govt. not to ban but to regularise the system.  Well, the comparison of surge pricing with the other commodities in the free market economy is completely interlinked with each other, it’s the same as govt. taking action against accumulators and confiscating the onions hidden in go-downs (gautam 2016)

The Socio-analytical approach towards these cab aggregators has described the certain analogies to mystify differential pricing based on uniformity in the consumer paying for the same level of service, whereas cheaper and compact price service was offered in similar section of cars or cabs but in economically weaker part of the city. This has raised the argument of surge pricing which has led the aggregators in monopolising the market segment.  Whereas, the evaluation of such differential prices should be monitored by the regulators in accordance to meet the govt. objectives of fair pricing and this intervention is definitely helps to withstand neutrality in the implementing and monitoring phase of the certain policy design.

As the Competition act makes clear, the sheer ownership of a dominant position is not unlawful; hence the present paradigm of competition in the market is relevant and has been discussed by CCI (Competition Commission of India) which helps in distinguishing the strong market positions which are the result of superior technological advancements but the barriers of price transparency and homogeneity making the situation of cartelization. The legacy of govt. ownership or control is strong and that the vision of truly competitive markets, the govt. should also recognised where it lacked and obligates the need of private interventions (Rab 2012)  yet the current status quo deprives customers of an alternative option.

Govt. should intervene in order to overcome certain predatory prices and the strict regulations should be levied in the existing structure, the way forward approach is to earmarked competition advocacy role that has been assigned to CCI. (Rab 2012) India is a social democratic country. Monopoly over a market and exploiting the consumers isn't good for the country. After LPG reforms the market is being opened up; But no matter how free an economy is there should always be a regulator with proper regulation, hence, policy debates are not always favourable and rational (Insights 2016)

I think govt. should prioritize certain measures to empirically determine the need and existence of surge pricing, the prices are not manually decided it is based on algorithmic model and it is dynamic in nature. Instead of criticising, govt. should adept vigilant approach towards the model and should formulate a channel to accommodate such business models which will help in controlling traffic congestions or introducing varied transport infrastructure and are coherent. So basically surge pricing is the increase in the prices when demand exceeds supply, it’s a sheer example of competition economics and when the maximum requirement observed and the absence of surge pricing leads to economic inefficiencies. Here, the concept of both conventional and behavioural economics came into existence.

With limited availability of resources that leads to surging. Policy makers need to ensure predatory pricing techniques and to provide similar analogies what has been observed in digital and online marketing. Aggregators are the better source of public transport and have sustainable business model, India can become a trendsetter in fulfilling the challenge by creating viable transport infrastructure. Govt. should develop a sustainable biosphere where it may create win- win situation for all.        

References:

Arvind Gupta, Pranab obhrai. The nuts and bolts of surge pricing and the way forward. May 3, 2016.

Gautam, shashwat. Delhi Government is right in checking the surge pricing of OLA and UBER. Delhi , april 23, 2016.

Insights. The recent clampdown on surge pricing by the Delhi and Karnataka governments is good for country. may 9, 2016.

Rab, Suzzane. Indian Competition Law. Gurgaon: Wolters Kluwer(India) pvt ltd, 2012.