Give Uber and Lyft a Ride: Journey From Ride Hailing to External Businesses

Abstract

The success of mobility as a service (MaaS) platforms, like Uber and Lyft, depends on how they manage their demand and the pool of drivers. In MaaS platforms, driver compensation has been at the forefront of discussion. Furthermore, since these platforms have only just been profitable, they are looking for ways to become financially sustainable. For example, Uber has been experimenting with external businesses like electric bicycle and motorized scooter rentals, ferry transport, Uber bus and shuttle services. However, ride hailing and other driver-dependent services are still the core business for these platforms. Although the literature has focused on ride hailing, there is no work that considers the impact of additional sources of revenue on MaaS platforms. In this study, we attempt to fill this gap. We find that although the involvement of a platform in external businesses is beneficial to itself, this engagement reduces the profitability of the other platform and may decrease the average driver compensation on both platforms. Second, interestingly, the driver compensation may reduce when the demand surges. Third, the drivers are not necessarily better off if users value driver availability more. We present several other useful insights that may be of interest to not only the MaaS platforms in managing their operations under competition but also the drivers.

Keywords: Mobility as a service (MaaS) platforms, pricing, differential games, analytical modeling