The Impact of Multi-homing in a Ride-Hailing Market

Oksana Loginova (), X. Wang () and Qihong Liu

No 2013, Working Papers from Department of Economics, University of Missouri

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 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 two multi-homing settings, multi-homing on the rider side and multi-homing on the driver side. 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.

Keywords: Ride-hailing platform; two-sided markets; network externalities; multi-homing (search for similar items in EconPapers)
JEL-codes: D85 L12 L13 (search for similar items in EconPapers)
Pages: 16 pages
Date: 2020-10-09
New Economics Papers: this item is included in nep-com, nep-mic, nep-pay and nep-ure
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Related works:
Working Paper: The Impact of Multi-homing in a Ride-Hailing Market (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:umc:wpaper:2013

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