To outsource or not: Bike-share rebalancing strategies under the service quality deviation of a third party

Wei Gu, Xiaoru Yu, Shichen Zhang, Xiangbin Yan and Chen Wang

European Journal of Operational Research, 2023, vol. 310, issue 2, 847-859

Abstract: Choosing third-party service providers (3PSPs) to rebalance bikes is an important strategy for bike-sharing companies. However, since a 3PSP is another stakeholder, whether the two parties will cooperate to complete the bike-rebalancing procedure needs further discussion. This study uses evolutionary game theory to study the strategic choices of bike-sharing companies’ rebalancing strategies (i.e., self-operation, joint venture, and outsourcing) and 3PSPs’ cooperation strategies (i.e., cooperation, no cooperation, and cooperation with deviation). Using DIDI Bike data, one of the largest dockless bike-sharing companies in China, to simulate a model and conduct sensitivity analyses, we show that (1) outsourcing and cooperation with deviation are long-term optimal strategies when 3PSPs have a small variable cost advantage and a high penalty and rebalancing effort; (2) not outsourcing (i.e., joint venture or self-cooperation) and not cooperating are long-term optimal strategies when the variable cost advantage, penalty, and the rebalancing effort is small for 3PSPs; and (3) outsourcing and cooperation are long-term optimal strategies when variable cost advantage, penalty, and rebalancing effort is high for 3PSPs. The results show that choosing third parties with a large variable cost advantage would help bike-sharing companies reach a rebalancing level. However, a penalty mechanism may be not effective in deterring 3PSPs from deviations in service quality.

Keywords: OR in service industries; Evolutionary game theory; Bike rebalancing; Outsourcing service; Third-party service quality deviation (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ejores:v:310:y:2023:i:2:p:847-859

DOI: 10.1016/j.ejor.2023.03.009

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