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A theory of multihoming in rideshare competition

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  • Kevin A. Bryan
  • Joshua S. Gans

Abstract

We examine competition among ridesharing platforms, where firms compete on both price and the wait time induced with idled drivers. We show that when consumers are the only agents who multihome, idleness is lower in duopoly than when consumers 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.

Suggested Citation

  • Kevin A. Bryan & Joshua S. Gans, 2019. "A theory of multihoming in rideshare competition," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 28(1), pages 89-96, January.
    • Handle: RePEc:bla:jemstr:v:28:y:2019:i:1:p:89-96
    DOI: 10.1111/jems.12306
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    References listed on IDEAS

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    1. Cody Cook & Rebecca Diamond & Jonathan V Hall & John A List & Paul Oyer, 2021. "The Gender Earnings Gap in the Gig Economy: Evidence from over a Million Rideshare Drivers [Measuring the Gig Economy: Current Knowledge and Open Issues]," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 88(5), pages 2210-2238.
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    More about this item

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation

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