Value of Information Sharing and Information-Technology-enabled Operations via Transportation Network Company Apps: An Empirical Analysis

51 Pages Posted: 2 Mar 2018 Last revised: 24 Dec 2020

See all articles by Kyung Sun (Melissa) Rhee

Kyung Sun (Melissa) Rhee

University of Florida - Warrington College of Business

Jinyang Zheng

Purdue University - Krannert School of Management

Youwei Wang

Fudan University - School of Management

Yong Tan

University of Washington - Michael G. Foster School of Business

Date Written: February 20, 2018

Abstract

A transportation network company (TNC) is an app-based, two-sided platform that matches riders with vehicles via information technology (IT). In 2015, the Shanghai government introduced a policy to restrict taxi drivers’ use of TNC apps during certain hours. We leverage this policy shock and collect comprehensive data on various transportation usages to gauge the economic benefits of information sharing and IT-enabled operations via TNC apps for existing capacity and its subsequent externalities on alternative transportation modes. We identify significant decreases in the operational efficiency of a TNC-enabled taxi fleet during the policy’s enforcement time but a significant increase during some non-enforcement times. Further, the traffic on public transportation via the city’s transportation cards significantly increases after launching the policy during both enforcement and most non-enforcement times. Moreover, the congestion on the surface streets and expressways during the policy enforcement and part of non-enforcement times significantly increase, indicating a spillover to the use of vehicles other than the affected taxis such as private automobiles. Interestingly, our mechanism analysis shows an increased average distance after the restriction, which reveals that information sharing and IT-enabled operations via TNC apps reduce drivers’ search cost, and, thus, enable them to match not only with more orders but also with those of higher marginal profit. This study contributes to the information systems literature by revealing and justifying the economic value of information sharing and IT-enabled operations via TNC apps for use under the existing capacity. Practically, we not only evaluate the policy studied and make post-revision suggestions but also provide managerial insights on precise policy-making that best extracts the economic value of IT in TNCs and general forms of online two-sided platforms.

Keywords: : Transportation Network Companies, Economic Value of IT, Information Sharing, Externality, IT Public Policy

Suggested Citation

Rhee, Kyung Sun (Melissa) and Zheng, Jinyang and Wang, Youwei and Tan, Yong, Value of Information Sharing and Information-Technology-enabled Operations via Transportation Network Company Apps: An Empirical Analysis (February 20, 2018). Available at SSRN: https://ssrn.com/abstract=3128096 or http://dx.doi.org/10.2139/ssrn.3128096

Kyung Sun (Melissa) Rhee (Contact Author)

University of Florida - Warrington College of Business ( email )

Gainesville, FL 32611
United States

Jinyang Zheng

Purdue University - Krannert School of Management ( email )

West Lafayette, IN 47907-1310
United States
7654966221 (Phone)
7654966221 (Fax)

HOME PAGE: http://https://www.krannert.purdue.edu/directory/bio.php?username=zheng221

Youwei Wang

Fudan University - School of Management ( email )

No. 670, Guoshun Road
No.670 Guoshun Road
Shanghai, 200433
China

Yong Tan

University of Washington - Michael G. Foster School of Business ( email )

Box 353226
Seattle, WA 98195-3226
United States

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