Uber offers higher rates when moving into an area, sometimes the point of making a loss per ride. Once an area is established, they cut rates to drivers. Obviously, the drivers make the rational decision you’ve outlined above; but the taxi companies don’t come back.
Not only that, how would the proposed alternative make any sense for Uber? They spend a lot of money to undercut the taxi companies, only to abandon the market as soon as they have no competition?
The predatory practice would be to raise prices at that point, not to abandon the market, but they can't even do that very much because then they'd be undercut by Lyft or the taxi companies actually would come back.
