Offline operations strategies of bike-sharing platforms: pure profit or beyond profit?

Abstract

Bike-sharing platforms can adopt two different offline operations strategies, i.e., independent operations (Strategy I), where each platform independently manages its offline operations, and outsourcing (Strategy O), where one platform outsources its offline operations to another competing platform. With the rise of the “beyond profit” management doctrine, many bike-sharing platforms have begun to pursue dual purposes, i.e., both profits and consumer surpluses, instead of the single purpose, i.e., “pure profit”. Given these facts, this work examines the equilibrium offline operations strategies of two bike-sharing platforms in a duopoly market based on the Hotelling framework and analyzes the platform profits and consumer surplus when the platforms pursue a single purpose or dual purposes. Several important results are obtained. When the platforms engage in intensive competition, the equilibrium operations strategy of the two platforms is Strategy O, and pursuing dual purposes can harm their respective profits. Under weak platform competition, both the investment synergy effect and the investment efficiency of offline operations can significantly affect the platform equilibrium offline operations strategies, and the platforms can obtain higher profits when pursuing dual purposes than pursuing a single purpose if they give low attention weightings to consumer surplus. Additionally, consumer surplus can always be higher when the platforms pursue dual purposes than when pursuing a single purpose, but Pareto improvement may be achieved by the platforms and consumers regardless of the platform competition intensity and the adoption of Strategy I or O.