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Economics
Economies of Density
Cost advantages that arise from concentrating activity in a specific geographic area, making it more efficient to serve that area than a more dispersed one.
Economies of density are distinct from economies of scale (which reduce costs through total volume) and economies of scope (which reduce costs through product variety). Density is specifically about geographic concentration — the closer your customers, suppliers, or activities are to each other, the lower your per-unit costs. This is why cities exist: dense concentrations of people and economic activity create efficiency advantages that scattered populations can't match.
Uber and Lyft depend heavily on economies of density. In a dense market with many drivers and many riders concentrated in a small area, wait times are short and drivers stay busy — both sides of the platform benefit. In a sparse market with few drivers and riders spread across a large area, wait times are long and driver utilization is low. The same platform performs very differently depending on density.