Please read the following article about surge pricing: https://www.nytimes.com/2

Question

Please read the following article about surge pricing:

https://www.nytimes.com/2017/10/14/upshot/why-surge-prices-make-us-so-mad-what-springsteen-home-depot-and-a-nobel-winner-know.html

No one is forced to buy a marked-up concert ticket or to take a surge priced Uber ride.

What is it about surge pricing that makes you made? Aren't we all rational being endowed with free will?

Imagine you are the CEO of a firm that employs a surge pricing model: Discuss how the tactics you might employ to convince users that surge pricing is fair.

Explanation / Answer

surge price:

first of all let's understand what surge price is, when the demand of a product or service is more then its supply the prices of that product will rise. it is not manually fixed, ikt is derived according to the demand and supply of the product.

for example:

the organisers of a concert limits the price of the ticket between $50 to $200 and gave a lottery offer where the winners would get the concert tickets as less as $50,now this would lure people to participate in this lottery,the people who won will pay only $50 for that ticket but some wil have to pay the normal price knowing that someone has go that ticket for just $50.now. the point here is that nobody forced the people to buy the ticket at $200 but they bought it just because they could spend that much amount. also at the end of the concert when everybody will start moving towards home the taxi prices would rise as the demand is more at that time. people who wants to get home in time will pay whatever the fare is.

why surge pricing is good:

surge pricing is fair because it encourages the employees to work. when there is increase in demand the prices of the commodity would rise and the owner would give some bonus to the workers for working and completing the targets. to earn this bonus the workers will also put an effort to complete the given task.

as the demand for a product increases the consumer is also on risk whether if he will be able to get the desired product or not which he really needs at that moment. so paying a bit more for that product is not a bad idea. if the consumer is getting a surety that he will get the product by paying a bit more than the normal prices. therefore surge pricing is good at sometimes.

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