The Econometric SocietyEdited by: Marina Halac • Print ISSN: 0012-9682 • Online ISSN: 1468-0262
Econometrica: Sep, 2025, Volume 93, Issue 5
https://doi.org/10.3982/ECTA19106
p. 1811-1854
Juan Camilo Castillo
New technologies have recently led to a boom in real‐time pricing. I study the most salient example, surge pricing in ride hailing. Using data from Uber, I develop an empirical model of spatial equilibrium to measure the welfare effects of surge pricing. The model is composed of demand, supply, and a matching technology. It allows for temporal and spatial heterogeneity as well as randomness in supply and demand. I find that, relative to a uniform pricing counterfactual in which Uber sets the overall price level, surge pricing increases total welfare by 2.15% of gross revenue. Welfare effects differ substantially across sides of the market: rider surplus increases by 3.57% of gross revenue, whereas driver surplus and the platform's current profits decrease by 0.98% and 0.50% of gross revenue, respectively. Riders at all income levels benefit. Among drivers, those who work long hours are hurt the most, especially women.
Juan Camilo Castillo
This supplement contains material not found within the manuscript.
Juan Camilo Castillo
The replication package for this paper is available at https://doi.org/10.5281/zenodo.15191154. The authors were granted an exemption to publish parts of their data because either access to these data is restricted or the authors do not have the right to republish them. However, the authors included in the package, on top of the codes and the parts of the data that are not subject to the exemption, a simulated or synthetic dataset that allows running the codes. The Journal checked the data and the codes for their ability to generate all tables and figures in the paper and approved online appendices. Whenever the available data allowed, the Journal also checked for their ability to reproduce the results. However, the synthetic/simulated data are not designed to produce the same results. Given the highly demanding nature of the algorithms, the reproducibility checks were run on a simplified version of the code, which is also available in the replication package.
December 11, 2025
We are deeply saddened by the passing of Kate Ho, the John L. Weinberg Professor of Economics and Business Policy at Princeton University and a Fellow of the Econometric Society. Kate was a brilliant IO economist and scholar whose impact on the profession will resonate for many years to come.
