A Surge-Type Pricing in Ridesharing Systems is Stability Optimal

21 Pages Posted: 22 Mar 2018

See all articles by Costas Courcoubetis

Costas Courcoubetis

Singapore University of Technology and Design (SUTD)

Antonis Dimakis

Athens University of Economics and Business - Department of Informatics

Date Written: March 21, 2018

Abstract

The availability of drivers at a certain location affects the waiting time of passengers that arrive to be served by the platform. We introduce a queueing model for this waiting time and consider the effect on stability of available drivers’ mobility pattern, their willingness to accept rides in a given location, and the incentives offered by the platform.

For any fixed number of drivers, we characterize the largest set of passenger arrival rates which can result to stable queues under some policy dictating the movement of available drivers and their acceptance of rides. It turns out that any such policy can be enforced by offering appropriate region-dependent rewards to drivers for passenger pick up.

Next, we show that dynamic rewards which are proportional to the passenger queue lengths, have the property of stabilizing queues for any arrival rates within the stability region. Seen from the perspective of drivers, such rewards – which resemble surge pricing – maximize their utilization.

Keywords: Ridesharing, Queueing, Stability, Surge Pricing

Suggested Citation

Courcoubetis, Costas and Dimakis, Antonis, A Surge-Type Pricing in Ridesharing Systems is Stability Optimal (March 21, 2018). Available at SSRN: https://ssrn.com/abstract=3145663 or http://dx.doi.org/10.2139/ssrn.3145663

Costas Courcoubetis

Singapore University of Technology and Design (SUTD) ( email )

20 Dover Drive
Singapore, 138682
Singapore

Antonis Dimakis (Contact Author)

Athens University of Economics and Business - Department of Informatics ( email )

76 Patission Street
GR-10434 Athens
Greece
+30 210 8203 924 (Phone)

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