Regulating the ride-hailing market in the age of uberization

Daniel Vignon, Yafeng Yin and Jintao Ke

Transportation Research Part E: Logistics and Transportation Review, 2023, vol. 169, issue C

Abstract: The entry of transportation network companies like Uber and Lyft in the ride-hailing market has generated concerns that they unfairly compete against traditional street-hail services. However, regulatory action seeking to address this issue has either been lacking or has resulted in the suspension or restriction of e-hail services. In this paper, we propose a model of competition between these two services and investigate the design of optimal and parsimonious regulation to achieve social efficiency. When the e-hailing platform adopts instantaneous matching with a relatively large matching radius, we analytically show that, absent restrictions, the street-hailing firm has a pricing advantage and can thrive when competing against the e-hailing platform in dense markets or when trip distances are relatively short. Moreover, while a monopolist controlling both firms will tend to internalize some of its congestion externality, we show that congestion can become quite severe in a duopoly setting. However, we show that even when accounting for competition and congestion, regulators only need to regulate the per trip commission that each company earns to maximize social surplus. This provides a potential avenue to simplify the host of regulations, which have historically been a feature of the ride-hailing market and are currently hampering the street-hailing industry.

Keywords: Ride-hailing; Competition; Regulation; Commission cap (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1366554522003465
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:transe:v:169:y:2023:i:c:s1366554522003465

Ordering information: This journal article can be ordered from
http://www.elsevier.com/wps/find/journaldescription.cws_home/600244/bibliographic
http://www.elsevier. ... 600244/bibliographic

DOI: 10.1016/j.tre.2022.102969

Access Statistics for this article

Transportation Research Part E: Logistics and Transportation Review is currently edited by W. Talley

More articles in Transportation Research Part E: Logistics and Transportation Review from Elsevier
Bibliographic data for series maintained by Catherine Liu ().