Regulating Transportation Network Companies with a Mixture of Autonomous Vehicles and For-Hire Human Drivers

Di Ao, Jing Gao, Zhijie Lai and Sen Li

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Abstract: This paper investigates the equity impacts of autonomous vehicles (AV) on for-hire human drivers and passengers in a ride-hailing market, and examines regulation policies that protect human drivers and improve transport equity for ride-hailing passengers. We consider a transportation network companies (TNC) that employs a mixture of AVs and human drivers to provide ride-hailing services. The TNC platform determines the spatial prices, fleet size, human driver payments, and vehicle relocation strategies to maximize its profit, while individual passengers choose between different transport modes to minimize their travel costs. A market equilibrium model is proposed to capture the interactions among passengers, human drivers, AVs, and TNC over the transportation network. The overall problem is formulated as a non-concave program, and an algorithm is developed to derive its approximate solution with a theoretical performance guarantee. Our study shows that TNC prioritizes AV deployment in higher-demand areas to make a higher profit. As AVs flood into these higher-demand areas, they compete with human drivers in the urban core and push them to relocate to suburbs. This leads to reduced earning opportunities for human drivers and increased spatial inequity for passengers. To mitigate these concerns, we consider: (a) a minimum wage for human drivers; and (b) a restrictive pickup policy that prohibits AVs from picking up passengers in higher-demand areas. In the former case, we show that a minimum wage for human drivers will protect them from the negative impact of AVs with negligible impacts on passengers. However, there exists a threshold beyond which the minimum wage will trigger the platform to replace the majority of human drivers with AVs.

Date: 2021-12, Revised 2023-12
New Economics Papers: this item is included in nep-tre and nep-ure
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Published in Transportation Research Part A: Policy and Practice, Volume 180, 2024, 103975, ISSN 0965-8564

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