{"title":"Shared-Ride Efficiency of Ride-Hailing Platforms","authors":"Terry A. Taylor","doi":"10.1287/msom.2021.0545","DOIUrl":null,"url":null,"abstract":"Problem definition: Ride-hailing platforms offering shared rides devote effort to reducing the trip-lengthening detours that accommodate fellow customers’ divergent transportation needs. By reducing shared-ride delay, improving shared-ride efficiency has the twin benefits of making shared rides more attractive to customers and increasing the number of customers a driver can serve per unit time. Methodology/results: We analytically model a ride-hailing platform that can offer individual rides and shared rides. We establish results that are counter to naive intuition: greater customer sensitivity to shared-ride delay and greater labor cost can reduce the value of improving shared-ride efficiency, and an increase in shared-ride efficiency can prompt a platform to add individual-ride service. We show that when network effects are small, increasing shared-ride efficiency pushes wages to extremes: if the current wage is high (low), increasing shared-ride efficiency pushes the wage higher (lower). We provide a sharp characterization of whether shared-ride efficiency and labor supply are complements or substitutes. We provide simple conditions under which increasing shared-ride efficiency reduces (alternatively, increases) labor welfare. We provide evidence that increasing shared-ride efficiency increases consumer surplus. Managerial implications: Our results inform a platform’s decision of whether to invest in improving shared-ride efficiency, as well as how to change its service offering and wage, as shared-ride efficiency improves.Supplemental Material: The online supplement is available at https://doi.org/10.1287/msom.2021.0545 .","PeriodicalId":501267,"journal":{"name":"Manufacturing & Service Operations Management","volume":"112 1","pages":""},"PeriodicalIF":0.0000,"publicationDate":"2024-04-26","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Manufacturing & Service Operations Management","FirstCategoryId":"1085","ListUrlMain":"https://doi.org/10.1287/msom.2021.0545","RegionNum":0,"RegionCategory":null,"ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"","JCRName":"","Score":null,"Total":0}
引用次数: 0
Abstract
Problem definition: Ride-hailing platforms offering shared rides devote effort to reducing the trip-lengthening detours that accommodate fellow customers’ divergent transportation needs. By reducing shared-ride delay, improving shared-ride efficiency has the twin benefits of making shared rides more attractive to customers and increasing the number of customers a driver can serve per unit time. Methodology/results: We analytically model a ride-hailing platform that can offer individual rides and shared rides. We establish results that are counter to naive intuition: greater customer sensitivity to shared-ride delay and greater labor cost can reduce the value of improving shared-ride efficiency, and an increase in shared-ride efficiency can prompt a platform to add individual-ride service. We show that when network effects are small, increasing shared-ride efficiency pushes wages to extremes: if the current wage is high (low), increasing shared-ride efficiency pushes the wage higher (lower). We provide a sharp characterization of whether shared-ride efficiency and labor supply are complements or substitutes. We provide simple conditions under which increasing shared-ride efficiency reduces (alternatively, increases) labor welfare. We provide evidence that increasing shared-ride efficiency increases consumer surplus. Managerial implications: Our results inform a platform’s decision of whether to invest in improving shared-ride efficiency, as well as how to change its service offering and wage, as shared-ride efficiency improves.Supplemental Material: The online supplement is available at https://doi.org/10.1287/msom.2021.0545 .