Enhancing the Shared Mobility Market: Dissolving Market Segmentation and Understanding Market Friction
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guo-xtguo-mst-dusp-2023-thesis.pdf
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Thesis PDF
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1.87 MB
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Author(s)
Guo, Xiaotong
Advisor(s)
Zhao, Jinhua
Date Issued
June 2023
Publisher
Massachusetts Institute of Technology
Abstract
Over the past decade, the growth of ride-sharing companies, also known as Transportation Network Companies (TNCs), providing on-demand transportation services for passengers, has been one of the fastest worldwide. However, in the governance of the shared mobility market of a city or metropolitan area, two conflicting principles emerge: the healthy competition between multiple platforms, such as Uber and Lyft in the United States, and economies of network scale, which leads to higher chances for trips to be matched and thus higher operation efficiency, but which also implies a monopoly. The current shared mobility markets, as observed in different cities in the world, are either monopolistic, or largely segmented by multiple platforms, the latter with significant efficiency loss.
This thesis addresses the efficiency loss issues due to segmentation by proposing new market designs while keeping the competition between platforms. We first propose a theoretical framework for describing shared mobility markets and then propose four market structure designs thereupon. The framework and four designs are first discussed as an abstract model, without losing generality, thus not constrained to any specific city. High-level perspectives and detailed mechanisms for each proposed market structure are both examined. Then, to assess the real-world performance of these market structure designs, we used a ride-sharing simulator with real-world ride-hailing trip data from New York City to simulate. The proposed market designs can reduce the total vehicle-miles traveled (VMT) by 6\% while serving more customers with 8.4\% fewer total number of trips. In the meantime, customers receive better services with an on-average 5.4\% shorter waiting time.
On the other hand, platform drivers in the shared mobility market frequently switch or work for multiple platforms, providing a natural way of dissolving the market segmentation. However, the presence of significant market friction preventing platform drivers from multi-homing has been found in a recent survey distributed in Jakarta, Indonesia. In this thesis, we taxonomize and estimates perceived switching and multi-homing frictions on mobility platforms. Based on a structural model of driver labor supply, we estimate switching and multi-homing costs in a platform duopoly using public and limited high-level survey data in a shared mobility market with a transportation network company duopoly. Estimated costs are sizeable, and reductions in multi-homing and switching costs significantly affect platform market shares and driver welfare. Driver labor supply elasticity with respect to platform wage is also discussed considering both multi-homing and switching frictions.
MIT Department
Massachusetts Institute of Technology. Department of Urban Studies and Planning
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