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Can two competing on-demand service platforms be profitable?

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  • Bai, Jiaru
  • Tang, Christopher S.

Abstract

Can two competing on-demand service platforms be profitable in equilibrium? This question is well-studied for firms competing purely on price in a single-sided market, but it is not well-understood for competing service platforms that use price to influence passenger demand and wage to influence driver participation in a “two-sided” market. To fill this research gap, we analyze the equilibrium structure of different variants of a 2-stage non-cooperative game in which both platforms use lower prices and waiting time to compete for more customers and higher wages and utilization to entice more providers to participate.

Suggested Citation

  • Bai, Jiaru & Tang, Christopher S., 2022. "Can two competing on-demand service platforms be profitable?," International Journal of Production Economics, Elsevier, vol. 250(C).
    • Handle: RePEc:eee:proeco:v:250:y:2022:i:c:s0925527322002547
    DOI: 10.1016/j.ijpe.2022.108672
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    Cited by:

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    2. Zhuo, Wenyan & Peng, Jiawu & Wang, Jingru, 2024. "Game theoretical analysis of incumbent platform investment and the supplier entry strategies in an e-supply chain," International Journal of Production Economics, Elsevier, vol. 273(C).
    3. Gu, Wei & Heese, H. Sebastian & Kemahlıoğlu-Ziya, Eda & Ziya, Serhan, 2024. "Pricing for services with cross-segment externalities, capacity constraints, and competition," European Journal of Operational Research, Elsevier, vol. 313(2), pages 801-813.

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