IDEAS home Printed from https://ideas.repec.org/a/eee/transe/v161y2022ics1366554522000746.html
   My bibliography  Save this article

Optimal composition of solo and pool services for on-demand ride-hailing

Author

Listed:
  • Bahrami, Sina
  • Nourinejad, Mehdi
  • Nesheli, Mahmood Mahmoodi
  • Yin, Yafeng

Abstract

On-demand ride-hailing services are becoming a ubiquitous means of mobility in major cities. While convenient and accessible, they are costly for many, and thus ride-hailing providers are often offering pooling options that allow passengers to share a ride and split the fare. The downside of pooling is the extra waiting time passengers may experience as drivers make detours to find and board additional passengers. This paper assesses the competitive advantage of solo (single occupancy) and pool services and investigates the potential benefits of offering both. We characterize the search friction using bilateral meeting functions and present a closed queueing system to capture the pooling effects. We then derive the optimal fare, vehicle occupancy and fleet size for solo and pool services. In symmetric-elasticity meeting functions, we analytically show that (i) the pool service is profitable only when there is increasing returns-to-scale in matching, (ii) the solo service is profitable when the marginal fleet acquisition cost is low, and (iii) the provider should offer both solo and pool services only when there is decreasing returns-to-scale in matching. These observations are further validated numerically for more general cases.

Suggested Citation

  • Bahrami, Sina & Nourinejad, Mehdi & Nesheli, Mahmood Mahmoodi & Yin, Yafeng, 2022. "Optimal composition of solo and pool services for on-demand ride-hailing," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 161(C).
    • Handle: RePEc:eee:transe:v:161:y:2022:i:c:s1366554522000746
    DOI: 10.1016/j.tre.2022.102680
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1366554522000746
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.tre.2022.102680?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. Yang, Hai & Yang, Teng, 2011. "Equilibrium properties of taxi markets with search frictions," Transportation Research Part B: Methodological, Elsevier, vol. 45(4), pages 696-713, May.
    2. 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.
    3. 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.
    4. Zhang, Kenan & Nie, Yu (Marco), 2021. "To pool or not to pool: Equilibrium, pricing and regulation," Transportation Research Part B: Methodological, Elsevier, vol. 151(C), pages 59-90.
    5. Philipp Afèche & J. Michael Pavlin, 2016. "Optimal Price/Lead-Time Menus for Queues with Customer Choice: Segmentation, Pooling, and Strategic Delay," Management Science, INFORMS, vol. 62(8), pages 2412-2436, August.
    6. Jacob, Jagan & Roet-Green, Ricky, 2021. "Ride solo or pool: Designing price-service menus for a ride-sharing platform," European Journal of Operational Research, Elsevier, vol. 295(3), pages 1008-1024.
    7. Francisco Calderón & Eric J. Miller, 2020. "A literature review of mobility services: definitions, modelling state-of-the-art, and key considerations for a conceptual modelling framework," Transport Reviews, Taylor & Francis Journals, vol. 40(3), pages 312-332, May.
    8. Wang, Hai & Yang, Hai, 2019. "Ridesourcing systems: A framework and review," Transportation Research Part B: Methodological, Elsevier, vol. 129(C), pages 122-155.
    9. 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.
    10. Daganzo, Carlos F. & Ouyang, Yanfeng, 2019. "A general model of demand-responsive transportation services: From taxi to ridesharing to dial-a-ride," Transportation Research Part B: Methodological, Elsevier, vol. 126(C), pages 213-224.
    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. Mamdoohi, Sohrab & Miller-Hooks, Elise & Gifford, Jonathan, 2023. "An equilibrium approach for compensating public–private partnership concessionaires for reduced tolls during roadway maintenance," Transportation Research Part A: Policy and Practice, Elsevier, vol. 175(C).
    2. Fielbaum, Andrés & Tirachini, Alejandro & Alonso-Mora, Javier, 2023. "Economies and diseconomies of scale in on-demand ridepooling systems," Economics of Transportation, Elsevier, vol. 34(C).
    3. Hua, Shijia & Zeng, Wenjia & Liu, Xinglu & Qi, Mingyao, 2022. "Optimality-guaranteed algorithms on the dynamic shared-taxi problem," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 164(C).

    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. Yining Liu & Yanfeng Ouyang, 2022. "Planning ride-pooling services with detour restrictions for spatially heterogeneous demand: A multi-zone queuing network approach," Papers 2208.02219, arXiv.org, revised Jun 2023.
    2. Liu, Yining & Ouyang, Yanfeng, 2023. "Planning ride-pooling services with detour restrictions for spatially heterogeneous demand: A multi-zone queuing network approach," Transportation Research Part B: Methodological, Elsevier, vol. 174(C).
    3. 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).
    4. 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.
    5. Li, Manzi & Jiang, Gege & Lo, Hong K., 2022. "Pricing strategy of ride-sourcing services under travel time variability," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 159(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. Liu, Yang & Li, Sen, 2023. "An economic analysis of on-demand food delivery platforms: Impacts of regulations and integration with ride-sourcing platforms," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 171(C).
    9. Daganzo, Carlos F. & Ouyang, Yanfeng & Yang, Haolin, 2020. "Analysis of ride-sharing with service time and detour guarantees," Transportation Research Part B: Methodological, Elsevier, vol. 140(C), pages 130-150.
    10. 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.
    11. Yao, Rui & Bekhor, Shlomo, 2023. "A general equilibrium model for multi-passenger ridesharing systems with stable matching," Transportation Research Part B: Methodological, Elsevier, vol. 175(C).
    12. Bahrami, Sina & Nourinejad, Mehdi & Yin, Yafeng & Wang, Hai, 2023. "The three-sided market of on-demand delivery," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 179(C).
    13. 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).
    14. Li, Manzi & Jiang, Gege & Lo, Hong K., 2023. "Optimal cancellation penalty for competing ride-sourcing platforms under waiting time uncertainty," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 174(C).
    15. Zhu, Zheng & Ke, Jintao & Wang, Hai, 2021. "A mean-field Markov decision process model for spatial-temporal subsidies in ride-sourcing markets," Transportation Research Part B: Methodological, Elsevier, vol. 150(C), pages 540-565.
    16. 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.
    17. Yang, Jie & Zhao, Daozhi & Wang, Zeyu & Xu, Chunqiu, 2022. "Impact of regulation on on-demand ride-sharing service: Profit-based target vs demand-based target," Research in Transportation Economics, Elsevier, vol. 92(C).
    18. Zhang, Kenan & Nie, Yu (Marco), 2022. "Mitigating traffic congestion induced by transportation network companies: A policy analysis," Transportation Research Part A: Policy and Practice, Elsevier, vol. 159(C), pages 96-118.
    19. Yu, Xinlian & Gao, Song & Hu, Xianbiao & Park, Hyoshin, 2019. "A Markov decision process approach to vacant taxi routing with e-hailing," Transportation Research Part B: Methodological, Elsevier, vol. 121(C), pages 114-134.
    20. Kucharski, Rafał & Cats, Oded, 2020. "Exact matching of attractive shared rides (ExMAS) for system-wide strategic evaluations," Transportation Research Part B: Methodological, Elsevier, vol. 139(C), pages 285-310.

    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:transe:v:161:y:2022:i:c:s1366554522000746. 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/600244/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.