Final answer:
Surge pricing is a tactic used by Uber to balance supply and demand by adjusting ride costs according to real-time demand. While effective, it can be viewed as unfair due to high prices during peak times. Alternatives could include adjusting base fares, offering driver incentives, reservation systems, or more gradual dynamic pricing.
Step-by-step explanation:
The question of whether surge pricing is fair is a complex one, as it relates to market principles of supply and demand. Uber uses surge pricing as a mechanism to balance these forces; when there is high demand for rides and a limited number of drivers available, prices increase. This approach aims to encourage more drivers to get on the road during times of high demand and simultaneously manages the riders' demand by making it more costly to request a ride. However, some argue that this model can lead to excessively high prices that customers may find unfair.
To move away from surge pricing while still balancing supply and demand, Uber could consider alternative strategies like increasing base fare prices during expected high-demand periods or offering incentives to drivers to work during peak times. Another method could be implementing a reservation system that allows users to book rides in advance at a guaranteed rate, helping to prevent sudden spikes in prices. Moreover, employing a dynamic pricing model that adjusts prices more gradually could prevent the sticker shock that can occur with abrupt surges.