Strategic Driver Repositioning in Ride-Hailing Networks with Dual Sourcing

26 Pages Posted: 28 Mar 2022

See all articles by Tingting Dong

Tingting Dong

Harbin Institute of Technology, Department of Transportation Engineering

Qi Luo

Clemson University, Department of Industrial Engineering

Zhengtian Xu

George Washington University - Department of Civil and Environmental Engineering

Yafeng Yin

University of Michigan, Ann Arbor

Jian Wang

Harbin Institute of Technology

Date Written: February 21, 2022

Abstract

In ride-hailing markets, the spatial mismatch between supply and demand characterizes one of the most fundamental operational bottlenecks. The voluntary customer search of drivers is oftentimes inadequate for narrowing the demand-supply gaps and falls short in responding timely to the dynamic market conditions. To facilitate better supply management, some ride-sourcing platforms now adopt a dual-sourcing strategy by converting some freelance drivers as contractors, who would then follow platforms' guidance on repositioning movements when idle. This paper thus aims to analyze the implications of such a dual-sourcing strategy on the overall operations of ride-haling services. We consider a monopolistic platform that owns a blended workforce, with freelance drivers searching customers following their own preferences whilst contracted drivers repositioning in a centralized manner as system actuators. A mixed equilibrium model is devised to capture the interplay between the idle repositioning movements of both parties, and real-world data is invited to quantify the impacts of dual sourcing on various market sectors. Our numerical results confirm the effectiveness of dual sourcing in smoothing the operations, increasing the customer demand, and driving up the revenue of ride-hailing services. However, the benefit of dual sourcing to the platform remains sensitive to the proportion of contractors in the entire workforce as well as the stimulative commission beyond their regular service income.

Keywords: Ride-hailing market, dual sourcing, network equilibrium, supply management

Suggested Citation

Dong, Tingting and Luo, Qi and Xu, Zhengtian and Yin, Yafeng and Wang, Jian, Strategic Driver Repositioning in Ride-Hailing Networks with Dual Sourcing (February 21, 2022). Available at SSRN: https://ssrn.com/abstract=4040164 or http://dx.doi.org/10.2139/ssrn.4040164

Tingting Dong

Harbin Institute of Technology, Department of Transportation Engineering ( email )

China

Qi Luo

Clemson University, Department of Industrial Engineering ( email )

Zhengtian Xu (Contact Author)

George Washington University - Department of Civil and Environmental Engineering ( email )

800 22nd Street NW
Washington, DC 200052
United States

Yafeng Yin

University of Michigan, Ann Arbor ( email )

2350
Hayward Street
Ann Arbor, MI 48109
United States

Jian Wang

Harbin Institute of Technology ( email )

Heilongjiang
China
0451-86282840 (Phone)
0451-86412866 (Fax)

HOME PAGE: http://homepage.hit.edu.cn/wangjian2012 copy

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