A Theory of Multihoming in Rideshare Competition

8 Pages Posted: 24 Jan 2019

See all articles by Kevin A. Bryan

Kevin A. Bryan

Virginia Commonwealth University (VCU)

Joshua S. Gans

University of Toronto - Rotman School of Management; NBER

Date Written: Spring 2019

Abstract

We examine competition among 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: Hotelling, idleness, platform, ridesharing

Suggested Citation

Bryan, Kevin A. and Gans, Joshua S., A Theory of Multihoming in Rideshare Competition (Spring 2019). Journal of Economics & Management Strategy, Vol. 28, Issue 1, pp. 89-96, 2019, Available at SSRN: https://ssrn.com/abstract=3320047 or http://dx.doi.org/10.1111/jems.12306

Kevin A. Bryan (Contact Author)

Virginia Commonwealth University (VCU) ( email )

1015 Floyd Avenue
Richmond, VA 23284
United States

Joshua S. Gans

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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