Ride-Hailing Platforms: Competition and Autonomous Vehicles

39 Pages Posted: 30 Jul 2019 Last revised: 1 Oct 2020

See all articles by Auyon Siddiq

Auyon Siddiq

University of California, Los Angeles (UCLA) - Anderson School of Management

Terry Taylor

University of California, Berkeley - Haas School of Business

Date Written: July 26, 2019

Abstract

Problem Definition: Ride-hailing platforms, which are currently struggling with profitability, view autonomous vehicles (AVs) as important to their long-term profitability and prospects. Are competing platforms helped or harmed by platforms' obtaining access to AVs? Are the humans that participate on the platforms--driver-workers and rider-consumers--(hereafter, agents) collectively helped or harmed by the platforms' access to AVs? How do the conditions under which access to AVs reduces platform profits, agent welfare, and social welfare depend on the AV ownership structure (i.e., whether platforms or individuals own AVs)?

Academic/Practical Relevance: AVs have the potential to transform the economics of ride-hailing, with welfare consequences for platforms, agents, and society.

Methodology: We employ a game-theoretic model that captures platforms' price, wage and AV fleet size decisions.

Results: We characterize necessary and sufficient conditions under which platforms' access to AVs reduces platform profit, agent welfare, and social welfare. The structural effect of access to AVs on agent welfare is robust regardless of AV ownership: agent welfare decreases if and only if the AV cost is high. In contrast, the structural effect of access to AVs on platform profit depends on who owns AVs. The necessary and sufficient condition under which access to AVs decreases platform profit is high AV cost under platform-owned AVs, and low AV cost under individually-owned AVs. Similarly, the structural effect of access to AVs on social welfare depends on who owns AVs. Access to individually-owned AVs increases social welfare; in contrast, access to platform-owned AVs decreases social welfare--if and only if the AV cost is high.

Managerial Implications: Our results provide guidance to platforms, labor and consumer advocates, and governmental entities regarding regulatory and public policy decisions affecting the ease with which platforms obtain access to AVs.

Keywords: ride-hailing, autonomous vehicles, platforms, competition

Suggested Citation

Siddiq, Auyon and Taylor, Terry, Ride-Hailing Platforms: Competition and Autonomous Vehicles (July 26, 2019). Available at SSRN: https://ssrn.com/abstract=3426988 or http://dx.doi.org/10.2139/ssrn.3426988

Auyon Siddiq

University of California, Los Angeles (UCLA) - Anderson School of Management ( email )

110 Westwood Plaza
Los Angeles, CA 90095-1481
United States

Terry Taylor (Contact Author)

University of California, Berkeley - Haas School of Business ( email )

545 Student Services Building, #1900
2220 Piedmont Avenue
Berkeley, CA 94720
United States

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