Drivers, Riders, and Service Providers: The Impact of the Sharing Economy on Mobility
Saif Benjaafar (),
Harald Bernhard (),
Costas Courcoubetis (),
Michail Kanakakis () and
Spyridon Papafragkos ()
Additional contact information
Saif Benjaafar: University of Minnesota, Minneapolis, Minnesota 55455
Harald Bernhard: Singapore University of Technology and Design, Singapore 487372
Costas Courcoubetis: Singapore University of Technology and Design, Singapore 487372
Michail Kanakakis: Singapore University of Technology and Design, Singapore 487372
Spyridon Papafragkos: Singapore University of Technology and Design, Singapore 487372
Management Science, 2022, vol. 68, issue 1, 123-142
Abstract:
It is widely believed that ride sharing, the practice of sharing a car such that more than one person travels in the car during a journey, has the potential to significantly reduce traffic by filling up cars more efficiently. We introduce a model in which individuals may share rides for a certain fee, paid by the rider(s) to the driver through a ride-sharing platform. Collective decision making is modeled as an anonymous nonatomic game with a finite set of strategies and payoff functions among individuals who are heterogeneous in their income. We examine how ride sharing is organized and how traffic and ownership are affected if a platform, which chooses the seat rental price to maximize either revenue or welfare, is introduced to a population. We find that the ratio of ownership to usage costs determines how ride sharing is organized. If this ratio is low, ride sharing is offered as a peer-to-peer (P2P) service, and if this ratio is high, ride sharing is offered as a business-to-customer (B2C) service. In the P2P case, rides are initiated by drivers only when the drivers need to fulfill their own transportation requirements. In the B2C case, cars are driven all the time by full-time drivers taking rides even if these are not motivated by their private needs. We show that, although the introduction of ride sharing may reduce car ownership, it can lead to an increase in traffic. We also show that traffic and ownership may increase as the ownership cost increases and that a revenue-maximizing platform might prefer a situation in which cars are driven with only a few seats occupied, causing high traffic. We contrast these results with those obtained for a social welfare-maximizing platform.
Keywords: ride sharing; sharing economy; transportation; equilibrium analysis; nonatomic games; social welfare (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (1)
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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:68:y:2022:i:1:p:123-142
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