Private vs. Pooled Transportation: Customer Preference and Design of Green Transport Policy

51 Pages Posted: 29 Sep 2020 Last revised: 15 Nov 2022

See all articles by Kashish Arora

Kashish Arora

Cornell University

Fanyin Zheng

Columbia University - Columbia Business School

Karan Girotra

Cornell Tech; Cornell SC Johnson College of Business

Date Written: April 30, 2022

Abstract

Problem Definition: Large cities around the globe are facing an alarming growth in traffic congestion and greenhouse gas emissions, to which a significant contributor in recent years are on-demand cabs operated by ride-hailing platforms. Pooled transportation options, such as shuttle services, are cheaper and greener alternatives. However, those alternatives are still new to many customers and policy makers. The design and effectiveness of their promotion policies demand careful investigation. This paper studies how we can reduce the number of on-demand cabs on the road and, therefore, their GHG emissions, by promoting the usage of pooled transportation such as shuttle services.

Practical Relevance: Reducing the number of ride-hailing vehicles on the road has become an important goal in many cities' green transport policy design. For example, cities like New York implemented congestion surcharge policies targeting ride-hailing vehicles in recent years.

Methodology: In this work, we use detailed usage data and build a structural model to study customers' preferences on price and service features when choosing between private cabs and a scheduled shuttle service.

Results: Using the estimated model, we identify and evaluate the efficacy of improving service features like reducing the walking distance to shuttle stops on customers' choices of transport and, therefore, the number of ride-hailing vehicles on the road. We find that a 20\% decrease in walking distance can reduce more than one million dollars worth of CO2 emissions, and achieve 40\% of the benefits attained by commonly adopted congestion surcharge policies. In addition, we demonstrate the implementability of walking distance reduction policies by addition of stops on existing shuttle routes.

Managerial Implications: Our findings suggest that, by changing operations levers such as service features of pooled transport, cities can achieve a substantial amount of the benefits from reducing congestion compared with congestion surcharge policies with essentially zero cost, leading to much more efficient green transport policies.

Keywords: Empirical Operations Management, Ride-hailing Services, Congestion Management, Choice Model, Structural Estimation, Machine Learning

JEL Classification: M1, R4, Y1

Suggested Citation

Arora, Kashish and Zheng, Fanyin and Girotra, Karan, Private vs. Pooled Transportation: Customer Preference and Design of Green Transport Policy (April 30, 2022). Available at SSRN: https://ssrn.com/abstract=3701056 or http://dx.doi.org/10.2139/ssrn.3701056

Kashish Arora (Contact Author)

Cornell University ( email )

Sage Hall
114 East Ave
Ithaca, NY 14850
United States

Fanyin Zheng

Columbia University - Columbia Business School ( email )

3022 Broadway
New York, NY 10027
United States

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

Karan Girotra

Cornell Tech ( email )

111 8th Avenue #302
New York, NY 10011
United States

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

Cornell SC Johnson College of Business ( email )

Ithaca, NY 14850
United States

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

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