The Impact of Ride-hailing Services on Congestion: Evidence from Indian Cities
Manufacturing & Service Operations Management (Forthcoming)
45 Pages Posted: 28 Jun 2019 Last revised: 12 Sep 2022
Date Written: June 24, 2019
Problem definition: Early research has documented significant growth in ride-hailing services world- wide and allied benefits. However, growing evidence of their negative externalities is leading policymakers to adopt a more conservative stance. Despite demonstrated socioeconomic benefits and consumer surplus worth billions of dollars, cities are choosing to curb these services in a bid to mitigate first order urban mobility problems. Existing studies on the congestion effects of ride-hailing are limited, report mixed evidence and exclusively focus on the United States, where the supply consists primarily of part-time drivers. Methodology/Results: We study how the absence of ride-hailing services affects congestion levels in three major Indian cities, a market where most ride-hailing drivers participate full time. Using rich real-time traffic and route trajectory data from Google Maps, we show that in all the three cities, periods of ride-hailing unavailability see a discernible drop in travel time. The effects are largest for the most congested regions during the busiest hours, which see 10.1 - 14.8 percent reduction in travel times. Additionally, we provide suggestive evidence for some of the mechanisms behind the observed effects, including deadheading elimination, substitution with public transit and opening up of shorter alternative routes. Managerial Implications: These results suggest that despite their paltry modal share, ride-hailing vehicles are substituting more sustainable means of transport and are contributing significantly to congestion in the cities studied. The reported effect sizes quantify the maximum travel time gains that can be expected on curbing them.
Keywords: Uber, Ola, Ridehailing, Externality, Ridesharing, Ridesourcing, Urban Transportation, Congestion, Sharing Economy, Traffic, Externality
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