Reducing surge pricing controversies: a case study of direct negotiation in ride-hailing services in the United States of America

Abstract

This paper aims to evaluate the efficiency of direct negotiation and feedback systems in responding to the surge pricing concerns in the US ride-hailing applications with New York City as the case study. The surge pricing has become a major issue as the fare has been increased more than the drivers’ compensation and has raised public concerns during crises. As the study aims to explore the following: How direct negotiations between the platform drivers and the platform management can reduce the above-stated challenges. How the feedback mechanisms strengthen the above- stated challenges. The study employs qualitative analysis of secondary data collected from online industry reports and articles from 2019-2024. The results show that from 2019 to 2022, the fare increase was 50%, while the median driver pay increase was only 31%, which also calls for more rational approaches to compensation. The study also reveals large disparities in the level of driver satisfaction across the different platforms; Lyft’s satisfaction rates are much higher at 75.8% in 2023 against Uber’s 49.4% because Lyft has more favourable feedback system and  driver support system. The study concludes that surge pricing can be effectively addressed when there is a right balance between fair pricing structures and support systems for the drivers as well as communication. The presented results advance the existing research on sustainable practises in the ride-hailing business and offer actionable suggestions for enhancing drivers’ satisfaction and fare clarity.