Question

In: Economics

1) What are the economic conditions of globalization that allow Uber to function across the world

1) What are the economic conditions of globalization that allow Uber to function across the world

Solutions

Expert Solution

It is considered a global, economically productive firm because it provides a service that people desire for a smaller cost than was previously offered. The fact that is relies on local inputs (labor) and is a service (nontradable good) does not mean Uber is not productive or economically beneficial.

Consider this simple situation:

  • It costs $10.00 to produce item A through process 1
  • It costs $3.00 to produce an identical item A through process 2


Hopefully we can all agree that process 2 is more efficient and economically beneficial to the world as it allows the same output for less input or, in other words, more output with the same input.

Uber is focused on building its business, which is what has made the brand so ubiquitous that it has become, like Google, a verb as well as a noun. The company has expanded its mission from providing rides on demand to reinventing transportation. It is efficiency that has led to new services that can reduce costs as well as emissions, the most notable of which is uberPOOL. POOL, which matches riders heading in the same direction for a shared trip, now makes up 20 percent of Uber rides globally.


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