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Competition and third-party platform-integration in ride-sourcing markets

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  • Zhou, Yaqian
  • Yang, Hai
  • Ke, Jintao
  • Wang, Hai
  • Li, Xinwei

Abstract

Recently, some third-party integrators attempt to integrate the ride services offered by multiple independent ride-sourcing platforms. Accordingly, passengers can request ride through the integrators and receive ride service from any one of the ride-sourcing platforms. This novel business model, termed as third-party platform-integration in this work, has potentials to alleviate market fragmentation cost resulting from demand splitting among multiple platforms. Although most existing studies focus on operation strategies for one single monopolist platform, much less is known about the competition and platform-integration and their implications on operation strategy and system efficiency. In this work, we propose mathematical models to describe the ride-sourcing market with multiple competing platforms and compare system performance measures between two market scenarios (i.e., with and without platform-integration) at Nash equilibrium and social optimum. We find that platform-integration can increase the total realized demand and social welfare at Nash equilibrium and social optimum, but may not necessarily generate a greater profit when the vehicle supply is sufficiently large, and/or the market is considerably fragmented. We show that the market with platform-integration generally achieves greater social welfare due to two reasons. First, platform-integration can generate a thicker market and reduce matching frictions; second, multiple ride-sourcing platforms are competing for passengers by setting lower trip fares independently.

Suggested Citation

  • Zhou, Yaqian & Yang, Hai & Ke, Jintao & Wang, Hai & Li, Xinwei, 2022. "Competition and third-party platform-integration in ride-sourcing markets," Transportation Research Part B: Methodological, Elsevier, vol. 159(C), pages 76-103.
    • Handle: RePEc:eee:transb:v:159:y:2022:i:c:p:76-103
    DOI: 10.1016/j.trb.2021.08.002
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    References listed on IDEAS

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    Cited by:

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    4. Son, Dong-Hoon & Yang, Hai, 2024. "Strategic use of fare-reward schemes in a ride-sourcing market: An equilibrium analysis," Transport Policy, Elsevier, vol. 146(C), pages 255-278.
    5. Wang, Yao & Jin, Huan & Zheng, Shiyuan & Shang, Wen-Long & Wang, Kun, 2023. "Bike-sharing duopoly competition under government regulation," Applied Energy, Elsevier, vol. 343(C).
    6. Li, Xiaonan & Li, Xiangyong & Shi, Junxin, 2024. "Capacity sharing for ride-sourcing platforms under competition," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 182(C).
    7. Ke, Jintao & Wang, Ce & Li, Xinwei & Tian, Qiong & Huang, Hai-Jun, 2024. "Equilibrium analysis for on-demand food delivery markets," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 184(C).
    8. Jun Tu & Juan Du & Min Huang, 2023. "Competition between Green and Non-Green Travel Companies: The Role of Governmental Subsidies in Green Travel," Sustainability, MDPI, vol. 15(9), pages 1-33, May.
    9. Li, Xiaonan & Li, Xiangyong & Wang, Hai & Shi, Junxin & Aneja, Y.P., 2022. "Supply regulation under the exclusion policy in a ride-sourcing market," Transportation Research Part B: Methodological, Elsevier, vol. 166(C), pages 69-94.
    10. Chen, Junlin & Xiong, Jinghong & Chen, Guobao & Liu, Xin & Yan, Peng & Jiang, Hai, 2024. "Optimal instant discounts of multiple ride options at a ride-hailing aggregator," European Journal of Operational Research, Elsevier, vol. 314(2), pages 718-734.
    11. Liu, Yang & Li, Sen, 2023. "An economic analysis of on-demand food delivery platforms: Impacts of regulations and integration with ride-sourcing platforms," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 171(C).
    12. Huang, Wentao & Jian, Sisi & Rey, David, 2024. "Non-additive network pricing with non-cooperative mobility service providers," European Journal of Operational Research, Elsevier, vol. 318(3), pages 802-824.
    13. Bao, Yue & Zang, Guangzhi & Yang, Hai & Gao, Ziyou & Long, Jiancheng, 2023. "Mathematical modeling of the platform assignment problem in a ride-sourcing market with a third-party integrator," Transportation Research Part B: Methodological, Elsevier, vol. 178(C).
    14. Li, Manzi & Jiang, Gege & Lo, Hong K., 2023. "Optimal cancellation penalty for competing ride-sourcing platforms under waiting time uncertainty," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 174(C).
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