SINGAPORE - Indonesian start-up Gojek has introduced dynamic pricing - where prices increase or decrease based on demand - for its ride-hailing service here.

In an e-mail sent to users on Sunday (Dec 30), Gojek told users that dynamic pricing would help shorten waiting times for both commuters and drivers.

While prices might be higher during high demand periods, it assured users rides would "remain competitively priced".

The firm - which launched a beta version of its app here in November - had earlier said it would not introduce dynamic pricing during its first few weeks of operations here.

"Dynamic pricing has now been introduced as part of our continued beta phase," a Gojek spokesman confirmed.

"This is part of Gojek's ongoing programme to improve user experience in Singapore as we fine-tune our service to ensure it remains competitively priced, while meeting the needs of Singaporeans," she added.

In an interview earlier in December, Lim Kell Jay, the Singapore head for Gojek's main competitor Grab, had told news site Today that it did not intend to engage in a price war with Gojek.

Before Uber's departure, Grab had competed fiercely with the American firm in offering both passengers and drivers generous incentives to gain market share.

Regarding whether a price war between Grab and Gojek is likely, Singapore University of Social Sciences transport economist Walter Theseira told The Straits Times that "it is clear that Gojek will use incentives to accumulate a reasonable market share".

Dynamic pricing is likely to attract more drivers to use the Gojek platform during peak hours, he added.

While upcoming regulations for point-to-point transportation services should include regulations on such pricing, these should not be restrictive, he said.

"Very restrictive rules on dynamic pricing just brings us back to the old days when you could not get a taxi during peak periods at all," said Associate Professor Theseira.