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Working Time under Alternative Pay Contracts in the Ride-Sharing Industry

Author

Listed:
  • Belloc Filippo

    (Department of Economics and Statistics, University of Siena, Piazza San Francesco 7, 53100 Siena, Italy)

Abstract

We study hours worked by drivers in the peer-to-peer transportation sector with cross-side network effects. Medallion lease (regulated market), commission-based (Uber-like pay) and profit-sharing (“pure” taxi coop) compensation schemes are compared. Our static model shows that network externalities matter, depending on the number of active drivers. When the number of drivers is limited, in the presence of positive network effects, a regulated system always induces more hours worked, while the commission fee influences the comparative incentives towards working time of Uber-like pay versus profit-sharing. When the number of drivers is infinite (or close to it), the influence of network externalities on optimal working time vanishes. Our model helps identifying which is the pay scheme that best remunerates longer working times and offers insights to regulators seeking to improve the intensive margin of coverage by taxi services.

Suggested Citation

  • Belloc Filippo, 2022. "Working Time under Alternative Pay Contracts in the Ride-Sharing Industry," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 22(1), pages 281-295, January.
    • Handle: RePEc:bpj:bejtec:v:22:y:2022:i:1:p:281-295:n:11
    DOI: 10.1515/bejte-2020-0026
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    More about this item

    Keywords

    working time; Uber; network effects; ride-sharing; pay schemes; L91; J22; J33;
    All these keywords.

    JEL classification:

    • L91 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Transportation: General
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods

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