How Do On-demand Ridesharing Services Affect Traffic Congestion? The Moderating Role of Urban Compactness

Li, Ziru, Liang, Chen, Hong, Yili and Zhang, Zhongju. 2021. How Do On-demand Ridesharing Services Affect Traffic Congestion? The Moderating Role of Urban Compactness. Forthcoming at Production and Operations Management.

55 Pages Posted: 14 Sep 2016 Last revised: 15 Jun 2021

See all articles by Ziru Li

Ziru Li

Arizona State University; Thunderbird School of Global Management

Chen Liang

University of Connecticut - School of Business

Yili Hong

University of Houston - C.T. Bauer College of Business

Zhongju Zhang

Arizona State University, W. P. Carey School of Business

Date Written: June 15, 2021

Abstract

The role of information technology (IT) in managing operations that support environmentally sustainable growth has been emphasized a lot in operations management and information systems research. In this paper, we study the impact of the IT-based on-demand ridesharing platforms on an important aspect of sustainability – traffic congestion. Our theoretical prediction suggests two countervailing effects from the entry of ridesharing platforms to urban areas: the efficiency-enhancing effect that reduces traffic congestion and the demand-inducing effect that increases traffic congestion. We propose that the impacts of ridesharing services on traffic congestion should vary with urban spatial features. Given the theoretical tension, we investigate the impact of Uber entry on traffic congestion in urban areas of the United States with a focus on the moderating role of urban compactness. Based on a unique dataset that combines multiple archival sources, we empirically examine whether the entry of Uber’s on-demand ridesharing service affects traffic congestion by using a difference-in-differences framework. Our empirical evidence indicates that ridesharing services significantly increase traffic congestion in compact areas. Meanwhile, we find some marginal evidence that ridesharing services decrease traffic congestion in sprawling urban areas. The results are robust to a series of additional analyses, including the use of alternative measures, relative time model, entry exogeneity test, and placebo tests. We conclude that the efficiency-enhancing and demand-inducing effects shape traffic congestion and that the net effect varies according to different levels of urban compactness. We provide circumstantial evidence for the underlying mechanisms by analyzing public transit and commuting characteristic data.

Keywords: sharing economy, on-demand ridesharing services, traffic congestion, sustainability, urban compactness

Suggested Citation

Li, Ziru and Liang, Chen and Hong, Yili and Zhang, Zhongju, How Do On-demand Ridesharing Services Affect Traffic Congestion? The Moderating Role of Urban Compactness (June 15, 2021). Li, Ziru, Liang, Chen, Hong, Yili and Zhang, Zhongju. 2021. How Do On-demand Ridesharing Services Affect Traffic Congestion? The Moderating Role of Urban Compactness. Forthcoming at Production and Operations Management. , Available at SSRN: https://ssrn.com/abstract=2838043 or http://dx.doi.org/10.2139/ssrn.2838043

Ziru Li

Arizona State University ( email )

400 E Van Buren St
Phoenix, AZ 85004
United States

Thunderbird School of Global Management

AZ
United States

Chen Liang

University of Connecticut - School of Business ( email )

2100 Hillside Road, Unit 1041
UConn School of Business OPIM
Storrs, CT Connecticut 06269
United States
06269 (Fax)

Yili Hong (Contact Author)

University of Houston - C.T. Bauer College of Business ( email )

Houston, TX 77204-6021
United States

Zhongju Zhang

Arizona State University, W. P. Carey School of Business ( email )

400 E Lemon St
Tempe, AZ AZ 85287
United States

HOME PAGE: http://wpcarey.asu.edu/people/profile/2712702

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
3,393
Abstract Views
14,239
rank
4,114
PlumX Metrics