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Pricing strategy and platform competition with partial multi-homing agents: When the aggregation platform exists in ride-sharing market

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  • Liu, Bin
  • Zhao, Xiuyan
  • Gu, Qiongqiaong

Abstract

As the platform of Ride-Sharing Platforms (RSPs), the Aggregation Platform (AP) integrates resources from RSPs which provide an on-demand car-sharing service by matching suitable passengers and drivers. From the view of the platform, consumer surpluses and social welfare, this paper discusses the platform's pricing strategy and mode selection (single-homing or multi-homing on agents) by the Hotelling model considering network effect and levels of user involvement. Research findings include whether RSP accesses the aggregation, the single-homing or multi-homing on the agents does not affect the agent fees both platforms charged. The multi-homing on agents makes the platform accessible to agents if the RSPs are not integrated into the aggregation platform. The multi-homing on agents makes the RSP subsidize agents, and AP charges higher fees to agents when RSP accesses the aggregation. Furthermore, under single-homing or multi-homing on the agents, the RSP with access to the aggregation will permanently harm its service providers but benefit AP and social welfare in specific conditions. Additionally, the multi-homing on agents will harm the aggregation platform service providers but benefit RSP and social welfare in specific conditions when the RSP accesses.

Suggested Citation

  • Liu, Bin & Zhao, Xiuyan & Gu, Qiongqiaong, 2024. "Pricing strategy and platform competition with partial multi-homing agents: When the aggregation platform exists in ride-sharing market," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 184(C).
    • Handle: RePEc:eee:transe:v:184:y:2024:i:c:s1366554524000735
    DOI: 10.1016/j.tre.2024.103483
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