The Competition Between Taxi Services and On-Demand Ride-Sharing Services: A Service Quality Perspective

Jie Yang, Zeyu Wang, Chunming Xu and Di Wang ()
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Jie Yang: School of Economics and Management, Taiyuan Science and Technology University, 66 Wailiu Road, Wanbailin District, Taiyuan 030024, China
Zeyu Wang: Department of Computer Engineering, Texas A&M University, 400 Bizzel St, College Station, TX 77840, USA
Chunming Xu: Institute of Operations Research and Systems Engineering, College of Science, Tianjin University of Technology, Tianjin 300384, China
Di Wang: School·of Accountancy, Beijing Wuzi University, Beijing 101149, China

Sustainability, 2024, vol. 16, issue 22, 1-25

Abstract: On-demand ride-sharing services change our travel behavior, which threatens the survival of taxi services. Motivated by this, this paper examines the impact of on-demand ride-sharing services on taxi services and how to achieve the coexistence of two services from a service quality perspective. This paper analyzes the coexistence condition of two services considering the network effect. First, the profit target for taxi drivers is nonnegative. A Stackelberg model is built in which the taxi service is the leader and the on-demand ride-sharing service is the follower. Then, the reference dependency theory is introduced to modify the profit target of taxi drivers. And the new coexistence condition is compared with the benchmark status. The results find that the coexistence of the two services depends on the type of riders and the quality difference in both cases. When two services and riders are highly heterogenous, two services are more likely to coexist. Services with different qualities could better satisfy the diverse preferences of riders. Considering taxi profit without competition as the profit reference point, the requirement of service quality difference and the diversity of rider composition is increased. In terms of the network effect, the negative network effect is more beneficial to the coexistence of two services.

Keywords: on-demand ride-sharing service; service quality; network effect; regulation policy (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2024
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