Uber and Lyft have changed the way local taxi service operates. Using independent drivers and driver-owned vehicles, both companies serve as middlemen using digital technology to provide on-demand transportation services to consumers. Nevertheless, Uber and Lyft customers often complain about the practice of "surge" or "prime-time" pricing used by these companies during periods of peak demand. From a classical economics perspective, this form of dynamic pricing makes sense based on supply and demand relationships. Fare increases in periods of high demand—a shift in the demand curve to the right—in turn increase the supply of drivers available for passengers.

From an ethical perspective, supporters of surge or prime-time pricing argue from a utilitarian view that this type of pricing increases the supply of drivers and more people get a ride. Remember from Chapter 3 that utilitarianism focuses on "the greatest good for the greatest number" by assessing the costs and benefits of the behavior, in this case, dynamic pricing. Critics of surge or prime-time pricing argue that this practice is flagrant price gouging by Uber and Lyft.

Question: Based on the understanding of surge pricing strategy employed by many businesses.

Where do you stand on the economics versus ethics debate related to surge or prime-time pricing? Be specific