Competition between the transportation network company and the government with subsidies to public transit riders

Zheng Zhu, Ailing Xu, Qiao-Chu He and Hai Yang

Transportation Research Part E: Logistics and Transportation Review, 2021, vol. 152, issue C

Abstract: The substitution and complement of ride-sourcing services and public transit services greatly affect the mobility and accessibility of a multi-modal transportation system. Since the transportation network company (TNC) (operator of ride-sourcing) concerns the profit and the government (operator of public transit) promotes social welfare, the two policy-makers will both cooperate and compete with each other to enhance their benefits. In this paper, we develop a bi-level game-theoretic approach to model the cooperative and competitive relationship between the TNC and the government. In the upper level, the two policy-makers design a cooperative plan such that the government provides subsidies to public transit riders who use ride-sourcing to solve first- or last-mile problems. In the lower level, they attempt to optimize operational strategies to compete with each other for achieving their objectives. The outcome of the bi-level game depends on passengers’ choices among alternative travel modes, which is characterized by an aggregate multi-modal market. Based on the proposed game-theoretic approach, we analytically and numerically examine the impact of the competition with passenger-side subsidies on the multi-modal system, and the existence of optimal strategies that lead to a win–win situation for both the policy-makers. We find that a socially-optimal subsidy level may exist. In areas with high public transit accessibility, a good-intentioned subsidy that boosts first- or last-mile ride-sourcing services can reduce the TNC’s profit. Our research highlights the value of a carefully designed subsidy structure that benefits both the TNC (profit) and the society (social welfare), especially in areas with low public transit accessibilities.

Keywords: Ride-sourcing; Public transits; Game-theoretic model; Coopetition (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (13)

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DOI: 10.1016/j.tre.2021.102426

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