Working Paper: NBER ID: w24806
Authors: Kevin A. Bryan; Joshua S. Gans
Abstract: We examine competition amongst ridesharing platforms where firms compete by choosing both the price of rides and the extent of idleness. Idleness means drivers who are compensated without picking up passengers, instead acting to reduce passenger wait time. We show that when consumers are the only agents who multihome, idleness falls compared with when they face a monopoly ridesharing platform. When drivers and consumers multihome, idleness further falls to zero as it involves costs for each platform that are appropriated, in part, by their rival. Interestingly, socially superior outcomes may involve monopoly or competition under various multihoming regimes, depending on the density of the city, and the relative costs of idleness versus consumer disutility of waiting.
Keywords: No keywords provided
JEL Codes: L13; L51
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Consumer multihoming (D16) | Reduced idleness (J22) |
| Both consumers and drivers multihome (D16) | Idleness falls to zero (J22) |
| Idleness falls compared to monopoly scenario (E19) | Reduced idleness (J22) |
| City density and costs associated with idleness (R41) | Social welfare outcomes (I38) |