I used Uber for the first time last month. I was in NYC for work and, like many others that day in Midtown Manhattan, I needed to get to my next meeting. I pulled up my Uber app and immediately saw how many potential drivers were near me. I quickly set my pickup location and then received the make, model, and partial license plate number of the car coming, and received an estimate of my wait time (which was less than 2 minutes). I told the driver my destination, which he dropped into his GPS, and a short drive later I was at my next meeting. I got out of the car and my Uber app did the rest- automatic payment and automatic tip. I even got a digital receipt for my expense report.
Uber is a player in what resembles a Cournot oligopoly. There are a handful of firms that provide most of the transportation in and around NYC (Yellow Cab, Luxury Cab, Green Cab, the subway, and Uber). For the most part there is no material difference in service. As we have seen with Uber, there are barriers to entry like a strong infrastructure being in place and the correct laws being followed. The number of taxis on the roads in NYC have remained fairly constant with the addition of Uber drivers even though the number of taxi pick-ups have declined. Uber’s success in this market has been due to the differentiation of the experience of transportation. You get picked up in someone’s personal car (which I presume they take better care of) and I don’t have to spend time paying and getting a receipt. I get in and get out without swiping a card and I dont have to shove a receipt into whatever pocket is most easily accessible.