Next time you need a ride, checking both Uber and Lyft might save you money.
On average, there is a 14% difference in price for the same ride between the two ride-hailing apps, according to a study conducted for the National Bureau of Economic Research and published this month. The study compared fares on Uber and Lyft in New York City in February of this year.
The difference might be just a dollar or two on each ride, but it can add up: The researchers behind the paper estimated that the gap, called "price dispersion" in economics, means that ride-hailing customers in New York City pay an extra $300 million annually by not comparing prices.
Yet few Lyft or Uber passengers check more than one app when they need a ride, the researchers found. Using separate data from Comscore, the study said that about 16% of ride-hailing customers across the US check both apps.
"Competition should be a click away, but people are acting like it isn't," Michael Luca, a professor at Johns Hopkins University's Carey Business School and one of the paper's authors, told Business Insider.
Harry Hartfield, head of product policy at Uber, said the study does not consider all the factors that can influence Uber's pricing, including the supply of drivers, customer demand, or the distance between the driver and the hailer. "The idea that two companies would display different prices isn't surprising — that's how a competitive marketplace works," Harfield said.
Sid Patil, Lyft's executive vice president of marketplace, said that Lyft also uses factors such as driver availability to determine prices. "Riders have a lot to gain, and little to lose by checking Lyft," he said.
"Price differences reflect real marketplace dynamics," Patil said, adding
The research found that "neither rideshare app is consistently more expensive than the other." Rather, it varied from fare to fare.
In theory, opening another rideshare app to get a second price quote should take less than a minute, Luca said.
In reality, the ride-hailing apps you use might be like your most-used search engine: While some people go out of their way to use a specific one, many others simply use whatever the default on their device or web browser is, Luca added
The design and terms of the apps themselves may also make it harder for customers to compare prices, according to the study. Uber doesn't allow third parties to use its API to offer price comparisons, for instance — a barrier that some apps that analyze ride-hailing driver pay have also run into because Uber says it violates the app's terms of service.
According to Luca, barriers to price comparison have helped, not hurt, these companies.
Last year, for the first time, Uber reported an annual profit. And Lyft has turned around its financial results over the last few years.
"Together, these findings show that small barriers to comparison can weaken effective competition and shift surplus toward platforms," the paper concludes.
Do you have a story to share about Uber, Lyft, or another company in the gig work space? Contact this reporter at abitter@bjinnox.com.
