Ride-Hailing Platforms: Competition and Autonomous Vehicles

Auyon Siddiq () and Terry A. Taylor ()
Additional contact information
Auyon Siddiq: Anderson School of Management, University of California, Los Angeles, California 90095
Terry A. Taylor: Haas School of Business, University of California, Berkeley, California 94720-1900

Manufacturing & Service Operations Management, 2022, vol. 24, issue 3, 1511-1528

Abstract: Problem definition : Ride-hailing platforms, which are currently struggling with profitability, view autonomous vehicles (AVs) as important to their long-term profitability and prospects. Are competing platforms helped or harmed by platforms’ obtaining access to AVs? Are the humans who participate on the platforms—driver-workers and rider-consumers (hereafter, agents)—collectively helped or harmed by the platforms’ access to AVs? How do the conditions under which access to AVs reduces platform profits, agent welfare, and social welfare depend on the AV ownership structure (i.e., whether platforms or individuals own AVs)? Academic/practical relevanc e: AVs have the potential to transform the economics of ride-hailing, with welfare consequences for platforms, agents, and society. Methodology : We employ a game-theoretic model that captures platforms’ price, wage, and AV fleet size decisions. Results : We characterize necessary and sufficient conditions under which platforms’ access to AVs reduces platform profit, agent welfare, and social welfare. The structural effect of access to AVs on agent welfare is robust regardless of AV ownership; agent welfare decreases if and only if the AV cost is high. In contrast, the structural effect of access to AVs on platform profit depends on who owns AVs. The necessary and sufficient condition under which access to AVs decreases platform profit is high AV cost under platform-owned AVs and low AV cost under individually owned AVs. Similarly, the structural effect of access to AVs on social welfare depends on who owns AVs. Access to individually owned AVs increases social welfare; in contrast, access to platform-owned AVs decreases social welfare—if and only if the AV cost is high. Managerial implications : Our results provide guidance to platforms, labor and consumer advocates, and governmental entities regarding regulatory and public policy decisions affecting the ease with which platforms obtain access to AVs.

Keywords: game theory; service operations (search for similar items in EconPapers)
Date: 2022
References: Add references at CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://dx.doi.org/10.1287/msom.2021.1013 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:inm:ormsom:v:24:y:2022:i:3:p:1511-1528

Access Statistics for this article

More articles in Manufacturing & Service Operations Management from INFORMS Contact information at EDIRC.
Bibliographic data for series maintained by Chris Asher ().