Editor's note

Taxi competitor Uber is changing the way it calculates fares, charging people based on their “willingness to pay”. This could mean you pay more depending on factors like what suburb you are travelling to. But as Jordi McKenzie writes, this kind of pricing is common, and could actually be a win-win for Uber and its customers.

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Deputy Editor Business & Economy

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Uber is changing the way it calculatess fares. Ritchie B Tongo/EPA

The economics behind Uber’s new pricing model

Jordi McKenzie, Macquarie University

Charging consumers different prices for the same service is actually a very common practice called "price discrimination".

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