The problem is surge pricing isn't solving the underlying problem (i.e, undersupply of drivers). Uber recently moved to a model where the driver bonuses are disconnected from the actual surge amount: https://www.washingtonpost.com/technology/2021/06/09/uber-ly...
Presumably if surge was focused on maximizing completed trips, then the goal is to find a price that matches riders to drivers.
In reality, riders are more interested in riding than drivers are in driving (this is how we got into this situation in the first place). You can easily charge 2x surge without killing demand, but supply won't rise by the corresponding amount.
Uber found a way to take advantage of this - fixed bonuses to attract the same amount of supply as before, but now surge is an independent variable that they can fine-tune to demand.
Your ride quality isn't improving with surge pricing, it's just getting more expensive.
Presumably if surge was focused on maximizing completed trips, then the goal is to find a price that matches riders to drivers.
In reality, riders are more interested in riding than drivers are in driving (this is how we got into this situation in the first place). You can easily charge 2x surge without killing demand, but supply won't rise by the corresponding amount.
Uber found a way to take advantage of this - fixed bonuses to attract the same amount of supply as before, but now surge is an independent variable that they can fine-tune to demand.
Your ride quality isn't improving with surge pricing, it's just getting more expensive.