Solo battle or collaborative gains? Platform aggregation under single-homing and multi-homing providers

Abstract

Platforms such as Google Maps, Gaode Navigation, and Meituan have emerged as aggregators, leveraging their market size and valuation advantages to integrate multiple ride-hailing platforms. This aggregation model fosters a co-opetitive relationship between aggregators and ride-hailing platforms. For ride-hailing platforms, the decision to compete with or join an aggregator entails complex trade-offs. In this study, we develop game-theoretic models to examine the strategic interactions between an aggregator and two ride-hailing platforms: platform 1, which has already joined the aggregator, and platform 2, which is evaluating whether to participate. We analyze their operational decisions under both single-homing and multi-homing scenarios. The key findings are as follows. First, after aggregation, platform 1 consistently reduces its pricing, whereas platform 2’s pricing strategy is shaped by both competitive pressure and valuation increment. Second, platform 2 collaborates with the aggregator only when its demand proportion on the aggregation channel is high and its valuation increment remains at a moderate level. Notably, the participation of platform 2 in aggregation consistently disadvantages platform 1, which has already engaged with the aggregator. Furthermore, we investigate the impact of provider multi-homing on equilibrium strategies. Intuitively, multi-homing allows providers to access a broader demand base, which diminishes the attractiveness of aggregation for ride-hailing platforms. Interestingly, we find that multi-homing mitigates price competition between platforms, consequently increasing their willingness to adopt aggregation. Lastly, we evaluate the surplus distribution among participants. Our findings provide valuable insights into the ongoing debate regarding the optimal conditions under which platforms should pursue aggregation to achieve mutually beneficial outcomes in different market environments.