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Ex-ante versus ex-post destination information model for on-demand service ride-sharing platform

Author

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  • Daozhi Zhao

    (Tianjin University)

  • Mingyang Chen

    (Tianjin University)

Abstract

The two leading on-demand service ride-sharing platforms in China have used very different destination information sharing models in the past period of time: Didi Chuxing uses an ex-ante destination information model (ADI) in which drivers can acquire the passengers’ destination information before receiving the orders, whereas Uber in China uses an ex-post destination information model (PDI) in which participants can only obtain the information after receiving the requests. This work compares ADI and PDI to study their impacts on the decisions as well as revenue/welfare of all stakeholders. We show that the PDI model generates more revenue for the platform than the ADI model in most cases, but it undermines the welfare of the passengers. This stands in sharp contrast with the existing views which argue that the ADI model can result in lower consumer surplus. Moreover, the platform can attract participants to choose the PDI model by increasing subsidies or degree of subsidies. Drivers are better off under the PDI model in most scenarios. The only exception is when both the opportunity cost and subsidy are lower or the subsidy is higher. Under this condition, the drivers can be worse off under the PDI model. Finally, if the platform adopts a new subsidy scheme which is related to the income of the participants, drivers are always better off under the PDI model but this model is still not good for the passengers. Besides, the higher demand state and equitable payoff are, the more social welfare under the ADI model it will generate.

Suggested Citation

  • Daozhi Zhao & Mingyang Chen, 2019. "Ex-ante versus ex-post destination information model for on-demand service ride-sharing platform," Annals of Operations Research, Springer, vol. 279(1), pages 301-341, August.
    • Handle: RePEc:spr:annopr:v:279:y:2019:i:1:d:10.1007_s10479-019-03316-w
    DOI: 10.1007/s10479-019-03316-w
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