A Smart Solution to Rush-Hour Traffic Congestion: Effects of Dockless Bike-Sharing Entry on Ride-Sharing

Problem definition: Dockless bike-sharing users use a mobile app to rent a bike located throughout a city, lock the bike at their destination, and then make it available to another user. We examine whether dockless bike-sharing systems can offer a technology-enabled solution to traffic congestion problems by providing a cost-effective and sustainable alternative mode of transportation. Academic/practical relevance: Urban planners, policymakers, transportation engineers, and scholars have sought innovative and sustainable solutions to the rush-hour traffic congestion problem. Methodology: We exploit a unique natural experiment setting in which the first dockless bike-sharing service was launched in Chengdu, China, in November 2016. We employ a difference-in-differences framework and utilize detailed ride-sharing order information from DiDi Chuxing (DiDi) to measure the demand for car travel. Results: We find that the entry of dockless bike-sharing decreases the demand for car travel during rush hour. For example, the number of ride-sharing pick-ups decreases by 12 percent during rush hour after the entry of dockless bike-sharing. Moreover, more congested locations witness a greater decline in ride-sharing orders during rush hour. We also find that locations with access to public transit experience a greater decline in car travel demand, which provides empirical evidence that dockless bike-sharing helps solve the first-mile/last mile problem during rush hour. Furthermore, we find a greater reduction in car travel demand during rush hour for locations with a high level of mobility and locations that are closer to the city center. Managerial implications: Overall, the dockless bike-sharing system, which combines information technologies with a sharing economy business model, reduces car travel demand during rush hour and provides a smart solution to the rush-hour traffic congestion problem.