Reducing Traffic Incidents in Meal Delivery: Penalize the Platform or its Independent Drivers?
46 Pages Posted: 29 Sep 2022
Date Written: September 28, 2022
To incentivize on-time delivery performance, meal delivery platforms often penalize their drivers for late deliveries. However, fierce competition forces these platforms to quote short meal delivery times. But shorter delivery times create extra pressure for drivers to drive at excessive speeds to avoid being penalized for late deliveries, causing otherwise avoidable traffic violations and accidents. To curb reckless driving behaviors, the Chinese government imposed an additional penalty for traffic incidents committed by meal delivery drivers. But this attempt was not effective because the number of traffic violations and accidents among meal delivery drivers has not abated. There is now ongoing debate about whether the government should penalize the platform for quoting shorter delivery times, which may be indirectly causes such traffic violations and accidents.
This backdrop motivates us to examine the following research questions: How should a profit-maximizing platform determine its quoted delivery times, its payment to independent drivers, and the late delivery penalty associated with a given government policy? How should a welfare-maximizing government determine its penalty policy to curb traffic incidents? By analyzing a three-stage Stackelberg game, we establish the following results. First, imposing an incident penalty on drivers will backfire: It can push the platform to quote shorter delivery times. Second, imposing an incident penalty on the platform will help: It provides an incentive for the platform to quote longer delivery times, which will ultimately reduce traffic violations and accidents. Third, it is optimal for the government to penalize the platform for traffic violations and accidents, but not its drivers. Our findings provide insights that will stimulate stakeholders’ discussions about improving public safety: Taking our results into consideration, the local government has started working on new regulations that can hold platforms accountable.
Keywords: Meal delivery platforms, Penalty system, Public safety, Traffic violations and accidents
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