An oligopoly is where there are only a few large firms that make up the market however Uber has the ability to break into as a monopoly seeing as it has a high market share in this industry which is increasing rapidly. Referring to Appendix 1, monopolies are a price maker so they have the power to set prices. According to Uber’s strategy, they have used low prices to break into the monopoly market and reach its maximum profits (P increases to P1). As shown in appendix 2, firms will always produce at the point where MC equals to MR and in the kinked demand curve, marginal cost can vary but profits will depend on how high the marginal cost is. Marginal revenue will remain the same however firms like Uber rely on branding and consumer loyalty so it charges lower because the rise in marginal cost will not necessarily affect prices. So being in a monopoly market gives a better advantage as they can reach higher profits whereas in an oligopoly, there would be overly aggressive price wars. This is because if Uber decreased its prices, competitors would do the …show more content…
It is a personal code in which if you share it with your friends, they will gain credits/rides for your invite e.g ‘Free Ride on your first Uber’. And once they ride with Uber, then you yourself gain credits as well. Uber uses this strategy to increase brand awareness and gain more customers thus increasing their market share and improving consumer satisfaction. Uber could also increase its supply by sending out more drivers on the roads especially on weekends after midnight seeing as demand reaches its peak and leads to surge pricing because of over excess demand. This is due to the limited choice of transportation – tubes are closed. In order for Uber to avoid losing customers, there should be a high amount of drivers in the city area/popular areas. Uber could also improve its quality by arriving promptly to avoid customer