Modeling and analyzing ride-hailing market equilibrium considering drivers’ multi-homing choice behavior

Abstract

The success of ride-hailing services has engendered the rise of multiple service platforms in a competitive market. To this end, drivers are widely observed delivering services on more than one platform simultaneously to maximize their profits, referred to as the “multi-homing” behavior. Drivers’ spontaneous multi-homing has the potential to mitigate market fragmentation but may also intensify their competition for passengers across platforms. This study aims to address the impacts brought by multi-homing drivers on the stakeholders of ride-hailing services. We employ a game-theoretical framework to model the choice of freelance drivers on whether and how to multi-home, as well as the decision of passengers on which platform to attend in an asymmetric market with loyal drivers. On account of the multi-homing behavior, we specifically identify the effective supply of platforms dictating the matching efficiency behind the seeming blossom of supply. On this basis, we compare the equilibrated market under drivers’ multi-homing behavior with a monopoly market and another equilibrated market having drivers single-homing on one platform. Our finding suggests that compared to a monopoly, multi-homing alleviates the wild-goose chase (WGC) dilemma and benefits all stakeholders in supply shortages due to its weaker matching efficiency, resulting in a rational demand level and more available vehicles. In contrast to the benchmark where drivers single-home, multi-homing enhances overall system performance due to the enlarged pool of vacant vehicles for passengers. Specifically, it strengthens the supply advantage of dominant platforms in more balanced markets, while facilitating the expansion of weaker platforms in highly asymmetric markets with a moderate freelance fleet. Extensive numerical results derived from real-world datasets indicate that multi-homing becomes a viable strategy for freelance vehicles in markets with limited supply, and multi-homing contributes to the growth of less influential platforms in practice.