Spatial Distribution of Supply and the Role of Market Thickness: Theory and Evidence from Ride Sharing

Soheil Ghili () and Vineet Kumar
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Soheil Ghili: Cowles Foundation & School of Management, Yale University, https://som.yale.edu/faculty/soheil-ghili
Vineet Kumar: School of Management, Yale University

No 2219, Cowles Foundation Discussion Papers from Cowles Foundation for Research in Economics, Yale University

Abstract: This paper develops a strategy with simple implementation and limited data requirements to identify spatial distortion of supply from demand -or, equivalently, unequal access to supply among regions- in transportation markets. We apply our method to ride-level, multi-platform data from New York City (NYC) and show that for smaller rideshare platforms, supply tends to be disproportionately concentrated in more densely populated areas. We also develop a theoretical model to argue that a smaller platform size, all else being equal, distorts the supply of drivers toward more densely populated areas due to network effects. Motivated by this, we estimate a minimum required platform size to avoid geographical supply distortions, which informs the current policy debate in NYC around whether ridesharing platforms should be downsized. We nd the minimum required size to be approximately 3.5M rides/month for NYC, implying that downsizing Lyft or Via-but not Uber{can increase geographical inequity.

Keywords: Spatial Markets; Transportation; Geographical Inequity; Market Thickness; Ridesharing (search for similar items in EconPapers)
JEL-codes: D62 L13 R41 (search for similar items in EconPapers)
Pages: 70 pages
Date: 2020-01
New Economics Papers: this item is included in nep-geo, nep-ind, nep-pay and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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