IDEAS home Printed from https://ideas.repec.org/a/eee/transb/v139y2020icp447-472.html
   My bibliography  Save this article

Modeling and managing heterogeneous ride-sourcing platforms with government subsidies on electric vehicles

Author

Listed:
  • Mo, Dong
  • Yu, Jingru
  • Chen, Xiqun Michael

Abstract

This paper formulates duopoly competition between two non-cooperative heterogeneous ride-sourcing platforms considering the adoption of electric vehicles (EV) and government subsidies on EVs. One ride-sourcing platform adopts an EV asset-heavy strategy by undertaking EV depreciation costs, while the other ride-sourcing platform adopts an asset-light strategy by hiring drivers who own vehicles. The first-order conditions of each platform's pricingunder competitive equilibrium are derived based on a game-theoretical model that involves the stakeholders (i.e., riders, drivers, and ride-sourcing platforms). Based on the modeling framework ofduopoly competition between two heterogeneous ride-sourcing platforms, this paper proposes an optimization model with social welfare maximization for the determination of governmentsubsidy strategies. We conduct numerical illustrations to demonstrate how governmental subsidies on EV purchase and charging stations impact the endogenous variables in equilibrium (e.g., price for riders, wage for drivers, and market share for each platform) under different formulations of riders' waiting time cost function, which are increasing returns to scale. Also, a specialmodel with a fixed commission ratio is discussed. The results provide suggestions for decision-makers on how to allocate subsidy within the budget constraint.

Suggested Citation

  • Mo, Dong & Yu, Jingru & Chen, Xiqun Michael, 2020. "Modeling and managing heterogeneous ride-sourcing platforms with government subsidies on electric vehicles," Transportation Research Part B: Methodological, Elsevier, vol. 139(C), pages 447-472.
    • Handle: RePEc:eee:transb:v:139:y:2020:i:c:p:447-472
    DOI: 10.1016/j.trb.2020.07.006
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0191261520303672
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.trb.2020.07.006?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Gnann, Till & Plötz, Patrick & Kühn, André & Wietschel, Martin, 2015. "Modelling market diffusion of electric vehicles with real world driving data – German market and policy options," Transportation Research Part A: Policy and Practice, Elsevier, vol. 77(C), pages 95-112.
    2. Belleflamme, Paul & Peitz, Martin, 2019. "Platform competition: Who benefits from multihoming?," International Journal of Industrial Organization, Elsevier, vol. 64(C), pages 1-26.
    3. Andersen, Poul H. & Mathews, John A. & Rask, Morten, 2009. "Integrating private transport into renewable energy policy: The strategy of creating intelligent recharging grids for electric vehicles," Energy Policy, Elsevier, vol. 37(7), pages 2481-2486, July.
    4. Xu, Zhengtian & Yin, Yafeng & Ye, Jieping, 2020. "On the supply curve of ride-hailing systems," Transportation Research Part B: Methodological, Elsevier, vol. 132(C), pages 29-43.
    5. Cen, Xuekai & Lo, Hong K. & Li, Lu & Lee, Enoch, 2018. "Modeling electric vehicles adoption for urban commute trips," Transportation Research Part B: Methodological, Elsevier, vol. 117(PA), pages 431-454.
    6. Yang, Hai & Wong, S. C. & Wong, K. I., 2002. "Demand-supply equilibrium of taxi services in a network under competition and regulation," Transportation Research Part B: Methodological, Elsevier, vol. 36(9), pages 799-819, November.
    7. Ke, Jintao & Cen, Xuekai & Yang, Hai & Chen, Xiqun & Ye, Jieping, 2019. "Modelling drivers’ working and recharging schedules in a ride-sourcing market with electric vehicles and gasoline vehicles," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 125(C), pages 160-180.
    8. Langbroek, Joram H.M. & Franklin, Joel P. & Susilo, Yusak O., 2016. "The effect of policy incentives on electric vehicle adoption," Energy Policy, Elsevier, vol. 94(C), pages 94-103.
    9. Hongmin Li & Woonghee Tim Huh, 2011. "Pricing Multiple Products with the Multinomial Logit and Nested Logit Models: Concavity and Implications," Manufacturing & Service Operations Management, INFORMS, vol. 13(4), pages 549-563, October.
    10. Zha, Liteng & Yin, Yafeng & Du, Yuchuan, 2018. "Surge pricing and labor supply in the ride-sourcing market," Transportation Research Part B: Methodological, Elsevier, vol. 117(PB), pages 708-722.
    11. Guillermo Gallego & Woonghee Tim Huh & Wanmo Kang & Robert Phillips, 2006. "Price Competition with the Attraction Demand Model: Existence of Unique Equilibrium and Its Stability," Manufacturing & Service Operations Management, INFORMS, vol. 8(4), pages 359-375, June.
    12. Sun, Hao & Wang, Hai & Wan, Zhixi, 2019. "Model and analysis of labor supply for ride-sharing platforms in the presence of sample self-selection and endogeneity," Transportation Research Part B: Methodological, Elsevier, vol. 125(C), pages 76-93.
    13. Qian, Xinwu & Zhang, Wenbo & Ukkusuri, Satish V. & Yang, Chao, 2017. "Optimal assignment and incentive design in the taxi group ride problem," Transportation Research Part B: Methodological, Elsevier, vol. 103(C), pages 208-226.
    14. Jiaru Bai & Kut C. So & Christopher S. Tang & Xiqun (Michael) Chen & Hai Wang, 2019. "Coordinating Supply and Demand on an On-Demand Service Platform with Impatient Customers," Manufacturing & Service Operations Management, INFORMS, vol. 21(3), pages 556-570, July.
    15. Hosni, Hadi & Naoum-Sawaya, Joe & Artail, Hassan, 2014. "The shared-taxi problem: Formulation and solution methods," Transportation Research Part B: Methodological, Elsevier, vol. 70(C), pages 303-318.
    16. Yongjun Ahn & Hwasoo Yeo, 2015. "An Analytical Planning Model to Estimate the Optimal Density of Charging Stations for Electric Vehicles," PLOS ONE, Public Library of Science, vol. 10(11), pages 1-26, November.
    17. Anders Skonhoft & Bjart Holtsmark, 2014. "The Norwegian support and subsidy of electric cars. Should it be adopted by other countries?," Working Paper Series 15814, Department of Economics, Norwegian University of Science and Technology.
    18. Sayarshad, Hamid R. & Chow, Joseph Y.J., 2015. "A scalable non-myopic dynamic dial-a-ride and pricing problem," Transportation Research Part B: Methodological, Elsevier, vol. 81(P2), pages 539-554.
    19. McConnell K. E., 1995. "Consumer Surplus from Discrete Choice Models," Journal of Environmental Economics and Management, Elsevier, vol. 29(3), pages 263-270, November.
    20. Wang, Xiaolei & He, Fang & Yang, Hai & Oliver Gao, H., 2016. "Pricing strategies for a taxi-hailing platform," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 93(C), pages 212-231.
    21. Lee, Alan & Savelsbergh, Martin, 2015. "Dynamic ridesharing: Is there a role for dedicated drivers?," Transportation Research Part B: Methodological, Elsevier, vol. 81(P2), pages 483-497.
    22. Wang, Xiaolei & Liu, Wei & Yang, Hai & Wang, Dan & Ye, Jieping, 2020. "Customer behavioural modelling of order cancellation in coupled ride-sourcing and taxi markets," Transportation Research Part B: Methodological, Elsevier, vol. 132(C), pages 358-378.
    23. Chen, Xiqun (Michael) & Zheng, Hongyu & Ke, Jintao & Yang, Hai, 2020. "Dynamic optimization strategies for on-demand ride services platform: Surge pricing, commission rate, and incentives," Transportation Research Part B: Methodological, Elsevier, vol. 138(C), pages 23-45.
    24. Chen, Yiwei & Wang, Hai, 2018. "Pricing for a Last-Mile Transportation System," Transportation Research Part B: Methodological, Elsevier, vol. 107(C), pages 57-69.
    25. Nourinejad, Mehdi & Ramezani, Mohsen, 2020. "Ride-Sourcing modeling and pricing in non-equilibrium two-sided markets," Transportation Research Part B: Methodological, Elsevier, vol. 132(C), pages 340-357.
    26. Guillermo Gallego & Ruxian Wang, 2014. "Multiproduct Price Optimization and Competition Under the Nested Logit Model with Product-Differentiated Price Sensitivities," Operations Research, INFORMS, vol. 62(2), pages 450-461, April.
    27. Hao, Han & Ou, Xunmin & Du, Jiuyu & Wang, Hewu & Ouyang, Minggao, 2014. "China’s electric vehicle subsidy scheme: Rationale and impacts," Energy Policy, Elsevier, vol. 73(C), pages 722-732.
    28. Hirte, Georg & Tscharaktschiew, Stefan, 2013. "The optimal subsidy on electric vehicles in German metropolitan areas: A spatial general equilibrium analysis," Energy Economics, Elsevier, vol. 40(C), pages 515-528.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Tang, Wei & Xie, Ningke & Mo, Dong & Cai, Zeen & Lee, Der-Horng & Chen, Xiqun (Michael), 2023. "Optimizing subsidy strategies of the ride-sourcing platform under government regulation," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 173(C).
    2. Ke, Jintao & Li, Xinwei & Yang, Hai & Yin, Yafeng, 2021. "Pareto-efficient solutions and regulations of congested ride-sourcing markets with heterogeneous demand and supply," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 154(C).
    3. Liu, Haoxiang & Zou, Yuncheng & Chen, Ya & Long, Jiancheng, 2021. "Optimal locations and electricity prices for dynamic wireless charging links of electric vehicles for sustainable transportation," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 152(C).
    4. Mo, Dong & Chen, Xiqun (Michael) & Zhang, Junlin, 2022. "Modeling and Managing Mixed On-Demand Ride Services of Human-Driven Vehicles and Autonomous Vehicles," Transportation Research Part B: Methodological, Elsevier, vol. 157(C), pages 80-119.
    5. Ke, Jintao & Chen, Xiqun (Michael) & Yang, Hai & Li, Sen, 2022. "Coordinating supply and demand in ride-sourcing markets with pre-assigned pooling service and traffic congestion externality," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 166(C).
    6. Sun, Luoyi & Teunter, Ruud H. & Hua, Guowei & Wu, Tian, 2020. "Taxi-hailing platforms: Inform or Assign drivers?," Transportation Research Part B: Methodological, Elsevier, vol. 142(C), pages 197-212.
    7. Jun Tu & Juan Du & Min Huang, 2023. "Competition between Green and Non-Green Travel Companies: The Role of Governmental Subsidies in Green Travel," Sustainability, MDPI, vol. 15(9), pages 1-33, May.
    8. Zhong, Yuanguang & Lan, Yibo & Chen, Zhi & Yang, Jiazi, 2023. "On-demand ride-hailing platforms with heterogeneous quality-sensitive customers: Dedicated system or pooling system?," Transportation Research Part B: Methodological, Elsevier, vol. 173(C), pages 247-266.
    9. Cai, Zeen & Mo, Dong & Geng, Maosi & Tang, Wei & Chen, Xiqun Michael, 2023. "Integrating ride-sourcing with electric vehicle charging under mixed fleets and differentiated services," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 169(C).
    10. Zhao, Meng & Li, Bin & Ren, Jiali & Hao, Zhihua, 2023. "Competition equilibrium of ride-sourcing platforms and optimal government subsidies considering customers’ green preference under peak carbon dioxide emissions," International Journal of Production Economics, Elsevier, vol. 255(C).
    11. Zhao, Dan & Ji, Shou-feng & Wang, He-ping & Jiang, Li-wen, 2021. "How do government subsidies promote new energy vehicle diffusion in the complex network context? A three-stage evolutionary game model," Energy, Elsevier, vol. 230(C).
    12. Meijian Yang & Enjun Xia, 2021. "A Systematic Literature Review on Pricing Strategies in the Sharing Economy," Sustainability, MDPI, vol. 13(17), pages 1-28, August.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Wang, Hai & Yang, Hai, 2019. "Ridesourcing systems: A framework and review," Transportation Research Part B: Methodological, Elsevier, vol. 129(C), pages 122-155.
    2. Ke, Jintao & Yang, Hai & Li, Xinwei & Wang, Hai & Ye, Jieping, 2020. "Pricing and equilibrium in on-demand ride-pooling markets," Transportation Research Part B: Methodological, Elsevier, vol. 139(C), pages 411-431.
    3. Shi, Junxin & Li, Xiangyong & Aneja, Y.P. & Li, Xiaonan, 2023. "Ride-matching for the ride-hailing platform with heterogeneous drivers," Transport Policy, Elsevier, vol. 136(C), pages 169-192.
    4. Zhu, Zheng & Xu, Ailing & He, Qiao-Chu & Yang, Hai, 2021. "Competition between the transportation network company and the government with subsidies to public transit riders," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 152(C).
    5. Cai, Zeen & Mo, Dong & Geng, Maosi & Tang, Wei & Chen, Xiqun Michael, 2023. "Integrating ride-sourcing with electric vehicle charging under mixed fleets and differentiated services," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 169(C).
    6. Ke, Jintao & Yang, Hai & Zheng, Zhengfei, 2020. "On ride-pooling and traffic congestion," Transportation Research Part B: Methodological, Elsevier, vol. 142(C), pages 213-231.
    7. Ke, Jintao & Chen, Xiqun (Michael) & Yang, Hai & Li, Sen, 2022. "Coordinating supply and demand in ride-sourcing markets with pre-assigned pooling service and traffic congestion externality," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 166(C).
    8. Yu, Jingru & Xie, Ningke & Zhu, Jiangtao & Qian, Yiwei & Zheng, Sijing & Chen, Xiqun (Michael), 2022. "Exploring impacts of COVID-19 on city-wide taxi and ride-sourcing markets: Evidence from Ningbo, China," Transport Policy, Elsevier, vol. 115(C), pages 220-238.
    9. Li, Xiaonan & Li, Xiangyong & Wang, Hai & Shi, Junxin & Aneja, Y.P., 2022. "Supply regulation under the exclusion policy in a ride-sourcing market," Transportation Research Part B: Methodological, Elsevier, vol. 166(C), pages 69-94.
    10. Sun, Luoyi & Teunter, Ruud H. & Hua, Guowei & Wu, Tian, 2020. "Taxi-hailing platforms: Inform or Assign drivers?," Transportation Research Part B: Methodological, Elsevier, vol. 142(C), pages 197-212.
    11. Ke, Jintao & Li, Xinwei & Yang, Hai & Yin, Yafeng, 2021. "Pareto-efficient solutions and regulations of congested ride-sourcing markets with heterogeneous demand and supply," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 154(C).
    12. Dong, Tingting & Xu, Zhengtian & Luo, Qi & Yin, Yafeng & Wang, Jian & Ye, Jieping, 2021. "Optimal contract design for ride-sourcing services under dual sourcing," Transportation Research Part B: Methodological, Elsevier, vol. 146(C), pages 289-313.
    13. Tang, Wei & Xie, Ningke & Mo, Dong & Cai, Zeen & Lee, Der-Horng & Chen, Xiqun (Michael), 2023. "Optimizing subsidy strategies of the ride-sourcing platform under government regulation," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 173(C).
    14. Zhao, Meng & Li, Bin & Ren, Jiali & Hao, Zhihua, 2023. "Competition equilibrium of ride-sourcing platforms and optimal government subsidies considering customers’ green preference under peak carbon dioxide emissions," International Journal of Production Economics, Elsevier, vol. 255(C).
    15. Li, Baicheng & Szeto, W.Y. & Luo, Qin, 2021. "A peak-period taxi scheme design problem: Formulation and policy implications," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 146(C).
    16. Xu, Zhengtian & Yin, Yafeng & Chao, Xiuli & Zhu, Hongtu & Ye, Jieping, 2021. "A generalized fluid model of ride-hailing systems," Transportation Research Part B: Methodological, Elsevier, vol. 150(C), pages 587-605.
    17. Meijian Yang & Enjun Xia, 2021. "A Systematic Literature Review on Pricing Strategies in the Sharing Economy," Sustainability, MDPI, vol. 13(17), pages 1-28, August.
    18. He, Shan & Dai, Ying & Ma, Zu-Jun, 2023. "To offer or not to offer? The optimal value-insured strategy for crowdsourced delivery platforms," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 173(C).
    19. Li, Yuanyuan & Liu, Yang, 2021. "Optimizing flexible one-to-two matching in ride-hailing systems with boundedly rational users," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 150(C).
    20. Li, Baicheng & Szeto, W.Y., 2021. "Modeling and analyzing a taxi market with a monopsony taxi owner and multiple rentee-drivers," Transportation Research Part B: Methodological, Elsevier, vol. 143(C), pages 1-22.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:transb:v:139:y:2020:i:c:p:447-472. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/548/description#description .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.