The impact of multi-homing in a ride-sharing market

Oksana Loginova (), X. Wang () and Qihong Liu ()
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Oksana Loginova: University of Missouri

The Annals of Regional Science, 2022, vol. 69, issue 1, No 9, 239-254

Abstract: Abstract Platforms such as Uber, Lyft and Airbnb serve two-sided markets with drivers (property owners) on one side and riders (renters) on the other side. Some agents join multiple platforms (multi-home). In the case of ride-sharing, a driver may drive for both Uber and Lyft, and a rider may use both apps and request a ride from the company that has a driver close by. In this paper, we are interested in welfare implications of multi-homing in such a market. Our model abstracts away from entry/exit by drivers and riders as well as pricing by platforms. Both drivers’ and riders’ surpluses are determined by the average time between a request and the actual pickup. The benchmark setting is a monopoly platform and the direct comparison is a single-homing duopoly. The former is more efficient since it has a thicker market. Next, we consider multi-homing on the rider side, multi-homing on the driver side, and multi-homing on both sides. Relative to single-homing duopoly, we find that multi-homing on either side improves the overall welfare. However, multi-homing drivers potentially benefit themselves at the cost of single-homing drivers. In contrast, multi-homing riders benefit themselves as well as single-homing riders, representing a more equitable distribution of gains from multi-homing.

JEL-codes: D85 L12 L13 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (2)

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DOI: 10.1007/s00168-022-01120-2

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