Ride-Hailing Platforms: Competition and Autonomous Vehicles

44 Pages Posted: 30 Jul 2019

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 compete over drivers and riders, assert that autonomous vehicles (AVs) will transform their operations by reducing variable cost payments to drivers. This paper explores the implications of competition and access to AVs for the management of ride-hailing platforms.

Academic/Practical Relevance: Ride-hailing, which has been transformed by platforms' use of independent driver-workers, has the potential to be transformed again by AVs. Methodology: We employ a game-theoretic model that captures platforms' AV fleet size, price and wage decisions.

Results: A platform's access to supply-side (namely, AV) technology changes prescriptions for its demand-side (namely, pricing) decisions: The intuitive prescription from the setting without AVs, that price increases in the intensity of competition in the labor market, is reversed. The presence of demand-side competition changes prescriptions for a platform's supply-side (namely, AV fleet size) decisions: The intuitive prescription from the setting without demand-side competition, that the AV fleet size increases in the intensity of competition in the labor market, is reversed. We characterize the conditions under which these reversals occur and explain the driving forces behind the reversals. Finally, whether a platform benefits from its rival's access to AV technology depends on a simple comparison between the relative wage sensitivity of labor and the relative price sensitivity of demand.

Managerial Implications: Competition and access to AVs each reverse intuitive prescriptions for the management of ride-hailing platforms.

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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