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The impact of multi-homing in a ride-sharing market

Author

Listed:
  • Oksana Loginova

    (University of Missouri)

  • X. Henry Wang

    (University of Missouri)

  • Qihong Liu

    (University of Oklahoma)

Abstract

Platforms such as Uber, Lyft and Airbnb serve two-sided markets with drivers (property owners) on one side and riders (renters) on the other side. Some agents join multiple platforms (multi-home). In the case of ride-sharing, a driver may drive for both Uber and Lyft, and a rider may use both apps and request a ride from the company that has a driver close by. In this paper, we are interested in welfare implications of multi-homing in such a market. Our model abstracts away from entry/exit by drivers and riders as well as pricing by platforms. Both drivers’ and riders’ surpluses are determined by the average time between a request and the actual pickup. The benchmark setting is a monopoly platform and the direct comparison is a single-homing duopoly. The former is more efficient since it has a thicker market. Next, we consider multi-homing on the rider side, multi-homing on the driver side, and multi-homing on both sides. Relative to single-homing duopoly, we find that multi-homing on either side improves the overall welfare. However, multi-homing drivers potentially benefit themselves at the cost of single-homing drivers. In contrast, multi-homing riders benefit themselves as well as single-homing riders, representing a more equitable distribution of gains from multi-homing.

Suggested Citation

  • Oksana Loginova & X. Henry Wang & Qihong Liu, 2022. "The impact of multi-homing in a ride-sharing market," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 69(1), pages 239-254, August.
    • Handle: RePEc:spr:anresc:v:69:y:2022:i:1:d:10.1007_s00168-022-01120-2
    DOI: 10.1007/s00168-022-01120-2
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    References listed on IDEAS

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    Cited by:

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    2. Wang, Yao & Jin, Huan & Zheng, Shiyuan & Shang, Wen-Long & Wang, Kun, 2023. "Bike-sharing duopoly competition under government regulation," Applied Energy, Elsevier, vol. 343(C).

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    More about this item

    JEL classification:

    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation
    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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