Last-mile Commute: Impact of Bike-sharing on Restaurants
Date Written: May 8, 2020
Last-mile commute refers to the last leg of people's travels within a city---after they come off a subway, or a quick trip to the corner shop. This paper studies how bike-sharing, which effectively eases people's last-mile commute, affects local restaurants' pricing and quality strategies. Our identification uses a difference-in-differences design by exploiting the temporal and geographical variations in the introduction of bike-sharing into different cities. We partnered with Baidu to collect the data of pricing and ratings of 746,115 restaurants that span three years prior to and after the entry of bike-sharing in 19 cities. We find that in response to bike-sharing's entry, restaurants reduce prices by 1.4% and increase service quality by 0.7%. We also show that such an effect is more pronounced for low-rating restaurants, whereas high-rating restaurants can even increase price and reduce quality, as bike-sharing eliminates the geographical barriers that enables restaurants to compete directly in reputation. In addition, high-rating restaurants in remote locations can benefit from bike-sharing's entry. The findings suggest that restaurants reposition their strategies when cities are in the process of embracing smart transits.
Keywords: Last-mile, entry response, bike-sharing, restaurant
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