Carpool Services for Ride-sharing Platforms: Price and Welfare Implications

Naval Research Logistics

40 Pages Posted: 25 Nov 2020 Last revised: 27 Sep 2021

See all articles by Xuan Wang

Xuan Wang

Hong Kong University of Science and Technology, ISOM Department

Renyu (Philip) Zhang

The Chinese University of Hong Kong

Date Written: September 25, 2021

Abstract

There has been rapid growth in on-demand ride-hailing platforms that serve as an intermediary to match individual service providers (drivers) with consumer demand (riders). Several major players of this market have introduced carpool services that allow passengers heading towards the same direction to share a ride at a discounted fare. In this paper, we develop an analytical model to study the pricing issues of ride-sharing platforms in the presence of carpool services, and their economical and social implications. We show that the carpool service should be provided when its quality and/or the pooling efficiency is high. When the platform finds it optimal to offer the carpool service option, the platform achieves a larger market coverage and the riders are able to enjoy more affordable rides without compromising on service quality. Our analysis reveals that the provision of carpool services benefits the platform and the riders in general, but may hurt the drivers.

Keywords: Sharing economy, on-demand two-sided platforms, carpool services, pricing, welfare analysis

Suggested Citation

Wang, Xuan and Zhang, Renyu, Carpool Services for Ride-sharing Platforms: Price and Welfare Implications (September 25, 2021). Naval Research Logistics, Available at SSRN: https://ssrn.com/abstract=3709645 or http://dx.doi.org/10.2139/ssrn.3709645

Xuan Wang

Hong Kong University of Science and Technology, ISOM Department ( email )

Clear Water Bay
Kowloon
Hong Kong, Not Applicable
Hong Kong
852-23585854 (Phone)

Renyu Zhang (Contact Author)

The Chinese University of Hong Kong ( email )

Shatin, N.T.
Hong Kong, Hong Kong
China

HOME PAGE: http://rphilipzhang.github.io/rphilipzhang/index.html

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
217
Abstract Views
950
Rank
254,917
PlumX Metrics