Uber has cut prices on its on-demand taxi services in New York City. The company has been engaging in a price war with upstart competitor Lyft, and the largest city in the U.S. is now part of the battle.

The new prices are in effect already and amount to an approximate 15 percent cut in rates for all New York City passengers. Uber has reduced the base fare in NYC to $2.55 from $3, the rate for each mile traveled will drop to $1.75 from $2.15 and the rate per minute will be lowered to 35 cents from the current 40.

The minimum fare, currently set at $8, will drop a dollar to $7. The net result means a ride from Midtown Manhattan to LaGuardia Airport will drop to $37.12 from $43.67, while a ride within the borough of Manhattan from Chelsea to the East Village will drop to $11.20 from the previous $13.18.

Earlier this month, Uber announced similar price cuts in over 100 U.S. cities, but New York was not included. Uber's main competitor in the on-demand taxi app segment, Lyft, followed less than a week later with price cuts of its own in 33 U.S. cities, which also excluded New York. Now that Uber has cut rates in the Big Apple, it will be interesting to see if Lyft follows suit.

While the price cut means the company and its drivers will make less money per ride, the increase in traffic — that is, traffic on its app, not on the roads — will increase substantially and more than make up for the price drops. Uber's last round of price cuts, which took place in July of 2014, resulted in driver time on the road without passengers dropping a substantial 42 percent.

Uber drivers seem to be accepting of the move as they believe the changes will help their bottom line by keeping them busier. Drivers of New York City's traditional yellow cabs are not happy, however, as they fear that Uber's move will cut usage of their taxis even more than it already has. The yellow cab drivers are unable to counter with a price drop of their own, as their rates are set by the city's Taxi and Limousine Commission.

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Tags: Uber Lyft