A Theory of Multihoming in Rideshare Competition

14 Pages Posted: 26 Jul 2018 Last revised: 3 Aug 2018

See all articles by Kevin Bryan

Kevin Bryan

University of Toronto - Strategic Management

Joshua S. Gans

University of Toronto - Rotman School of Management; NBER

Multiple version iconThere are 2 versions of this paper

Date Written: July 27, 2018

Abstract

We examine competition amongst ridesharing platforms, where firms compete on both price and the wait time induced with idled drivers. We show that when consumers are the only agents who multihome, idleness is lower in duopoly than when consumers face a monopoly ridesharing platform. When drivers and consumers multihome, idleness further falls to zero as it involves costs for each platform that are appropriated, in part, by their rival. Interestingly, socially superior outcomes may involve monopoly or competition under various multihoming regimes, depending on the density of the city, and the relative costs of idleness versus consumer disutility of waiting.

Keywords: platform, ridesharing, idleness

JEL Classification: L13, L51

Suggested Citation

Bryan, Kevin and Gans, Joshua S., A Theory of Multihoming in Rideshare Competition (July 27, 2018). Available at SSRN: https://ssrn.com/abstract=3208616 or http://dx.doi.org/10.2139/ssrn.3208616

Kevin Bryan

University of Toronto - Strategic Management ( email )

Canada

Joshua S. Gans (Contact Author)

University of Toronto - Rotman School of Management ( email )

Canada

HOME PAGE: http://www.joshuagans.com

NBER ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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