IDEAS home Printed from https://ideas.repec.org/a/eee/phsmap/v632y2023ip2s0378437123009147.html
   My bibliography  Save this article

The impact of regulatory policy on the growth of ride-hailing platform: System dynamics perspective

Author

Listed:
  • Sun, Shouheng
  • Wang, Zhenqin
  • Wang, Weicai

Abstract

Regulatory policy is an important factor affecting the development of emerging ride-hailing platforms. However, there is little research exploring the impact of specific regulatory policies on platforms from the perspective of enterprise growth. Taking the Chinese ride-hailing platform (RHP) as an example, this study employs the system dynamics method to simulate and analyze the impact of restrictive policies on the model of vehicles and the qualification of drivers on the growth of RHP. Furthermore, it compares and evaluates the effects of different countermeasures taken by the platform in the face of policy uncertainty. Specifically, this study dynamically examines the growth of platforms under loose/strict policy and short/long term policy scenarios, and evaluates the coping strategy of self-built fleet adopted by platform. The results show that regulatory policy uncertainty brings great challenges to the overall development of the RHP. A Self-built fleet not only has the potential to improve RHP's ability to resist policy risks but also increases the platform's scale effect at both ends of supply and demand. It is worth noting that RHP should devise the most suitable strategy according to a comprehensive evaluation of the characteristics of the regulatory policies and the cost-effectiveness of the countermeasure. It also shows that the promotion and application of new energy vehicles and automated vehicles can bring good profit margins to RHP in the future. This study can help policymakers and managers better understand of the impact of regulatory policy on the growth of RHP and also provide a valuable reference for promoting the healthy and orderly development of ride-hailing market.

Suggested Citation

  • Sun, Shouheng & Wang, Zhenqin & Wang, Weicai, 2023. "The impact of regulatory policy on the growth of ride-hailing platform: System dynamics perspective," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 632(P2).
  • Handle: RePEc:eee:phsmap:v:632:y:2023:i:p2:s0378437123009147
    DOI: 10.1016/j.physa.2023.129359
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0378437123009147
    Download Restriction: Full text for ScienceDirect subscribers only. Journal offers the option of making the article available online on Science direct for a fee of $3,000

    File URL: https://libkey.io/10.1016/j.physa.2023.129359?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. Ruutu, Sampsa & Casey, Thomas & Kotovirta, Ville, 2017. "Development and competition of digital service platforms: A system dynamics approach," Technological Forecasting and Social Change, Elsevier, vol. 117(C), pages 119-130.
    2. Parente, Ronaldo C. & Geleilate, José-Mauricio G. & Rong, Ke, 2018. "The Sharing Economy Globalization Phenomenon: A Research Agenda," Journal of International Management, Elsevier, vol. 24(1), pages 52-64.
    3. Elizabeth Garnsey & Erik Stam & Paul Heffernan, 2006. "New Firm Growth: Exploring Processes and Paths," Industry and Innovation, Taylor & Francis Journals, vol. 13(1), pages 1-20.
    4. Timo Seidl, 2022. "The politics of platform capitalism: A case study on the regulation of Uber in New York," Regulation & Governance, John Wiley & Sons, vol. 16(2), pages 357-374, April.
    5. Xu, Yu & Hazée, Simon & So, Kevin Kam Fung & Li, K. Daisy & Malthouse, Edward Carl, 2021. "An evolutionary perspective on the dynamics of service platform ecosystems for the sharing economy," Journal of Business Research, Elsevier, vol. 135(C), pages 127-136.
    6. Klarin, Anton & Suseno, Yuliani, 2021. "A state-of-the-art review of the sharing economy: Scientometric mapping of the scholarship," Journal of Business Research, Elsevier, vol. 126(C), pages 250-262.
    7. Muñoz, Pablo & Cohen, Boyd, 2017. "Mapping out the sharing economy: A configurational approach to sharing business modeling," Technological Forecasting and Social Change, Elsevier, vol. 125(C), pages 21-37.
    8. Jiang, Guoyin & Yang, Wanqiang, 2023. "Signal effect of government regulations on ride-hailing drivers’ intention to mobile-based transportation platform governance: Evidence from China," Transport Policy, Elsevier, vol. 139(C), pages 63-78.
    9. Zuzana Soltysova & Vladimir Modrak, 2020. "Challenges of the Sharing Economy for SMEs: A Literature Review," Sustainability, MDPI, vol. 12(16), pages 1-14, August.
    10. Koen Frenken & Juliet Schor, 2019. "Putting the sharing economy into perspective," Chapters, in: Oksana Mont (ed.), A Research Agenda for Sustainable Consumption Governance, chapter 8, pages 121-135, Edward Elgar Publishing.
    11. Hagiu, Andrei & Hałaburda, Hanna, 2014. "Information and two-sided platform profits," International Journal of Industrial Organization, Elsevier, vol. 34(C), pages 25-35.
    12. 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).
    13. Vignon, Daniel & Yin, Yafeng & Ke, Jintao, 2023. "Regulating the ride-hailing market in the age of uberization," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 169(C).
    14. 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).
    15. Wang, Hai & Yang, Hai, 2019. "Ridesourcing systems: A framework and review," Transportation Research Part B: Methodological, Elsevier, vol. 129(C), pages 122-155.
    16. Li, Sen & Tavafoghi, Hamidreza & Poolla, Kameshwar & Varaiya, Pravin, 2019. "Regulating TNCs: Should Uber and Lyft set their own rules?," Transportation Research Part B: Methodological, Elsevier, vol. 129(C), pages 193-225.
    17. Rodolphe Durand & Robert M. Grant & Tammy L. Madsen & David P. McIntyre & Arati Srinivasan, 2017. "Networks, platforms, and strategy: Emerging views and next steps," Strategic Management Journal, Wiley Blackwell, vol. 38(1), pages 141-160, January.
    18. David Gabel, 2016. "Uber and the Persistence of Market Power," Journal of Economic Issues, Taylor & Francis Journals, vol. 50(2), pages 527-534, April.
    19. David Audretsch & Alex Coad & Agustí Segarra, 2014. "Firm growth and innovation," Small Business Economics, Springer, vol. 43(4), pages 743-749, December.
    20. Samar Abdalla & Joseph Amankwah-Amoah & Amgad Badewi, 2023. "Sharing-Economy Ecosystem: A Comprehensive Review and Future Research Directions," Sustainability, MDPI, vol. 15(3), pages 1-15, January.
    21. Torres, Juan Pablo & Kunc, Martin & O'Brien, Frances, 2017. "Supporting strategy using system dynamics," European Journal of Operational Research, Elsevier, vol. 260(3), pages 1081-1094.
    22. Lee, Chang-Yang, 2010. "A theory of firm growth: Learning capability, knowledge threshold, and patterns of growth," Research Policy, Elsevier, vol. 39(2), pages 278-289, March.
    23. Zeng, Jing & Mahdi Tavalaei, M. & Khan, Zaheer, 2021. "Sharing economy platform firms and their resource orchestration approaches," Journal of Business Research, Elsevier, vol. 136(C), pages 451-465.
    24. Hu, Beibei & Zhong, Zhenfang & Zhang, Yanli & Sun, Yue & Jiang, Li & Dong, Xianlei & Sun, Huijun, 2022. "Understanding the influencing factors of bicycle-sharing demand based on residents’ trips," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 586(C).
    25. Junic Kim, 2016. "The platform business model and business ecosystem: quality management and revenue structures," European Planning Studies, Taylor & Francis Journals, vol. 24(12), pages 2113-2132, December.
    26. Sun, Daniel(Jian) & Ding, Xueqing, 2019. "Spatiotemporal evolution of ridesourcing markets under the new restriction policy: A case study in Shanghai," Transportation Research Part A: Policy and Practice, Elsevier, vol. 130(C), pages 227-239.
    27. Yanwei Li & Araz Taeihagh & Martin De Jong, 2018. "The Governance of Risks in Ridesharing: A Revelatory Case from Singapore," Energies, MDPI, vol. 11(5), pages 1-21, May.
    28. Bösch, Patrick M. & Becker, Felix & Becker, Henrik & Axhausen, Kay W., 2018. "Cost-based analysis of autonomous mobility services," Transport Policy, Elsevier, vol. 64(C), pages 76-91.
    29. Rong, Ke & Li, Boyi & Peng, Wan & Zhou, Di & Shi, Xinwei, 2021. "Sharing economy platforms: creating shared value at a business ecosystem level," Technological Forecasting and Social Change, Elsevier, vol. 169(C).
    30. Casey, Thomas R. & Töyli, Juuso, 2012. "Mobile voice diffusion and service competition: A system dynamic analysis of regulatory policy," Telecommunications Policy, Elsevier, vol. 36(3), pages 162-174.
    31. Wadud, Zia, 2017. "Fully automated vehicles: A cost of ownership analysis to inform early adoption," Transportation Research Part A: Policy and Practice, Elsevier, vol. 101(C), pages 163-176.
    32. Li-cai Lei & Shang Gao & En-yu Zeng, 2020. "Regulation strategies of ride-hailing market in China: an evolutionary game theoretic perspective," Electronic Commerce Research, Springer, vol. 20(3), pages 535-563, September.
    33. Rojanakit, Patcharapar & Torres de Oliveira, Rui & Dulleck, Uwe, 2022. "The sharing economy: A critical review and research agenda," Journal of Business Research, Elsevier, vol. 139(C), pages 1317-1334.
    34. Negar Darabi & Niyousha Hosseinichimeh, 2020. "System dynamics modeling in health and medicine: a systematic literature review," System Dynamics Review, System Dynamics Society, vol. 36(1), pages 29-73, January.
    35. Zachary Spicer & Gabriel Eidelman & Austin Zwick, 2019. "Patterns of Local Policy Disruption: Regulatory Responses to Uber in Ten North American Cities," Review of Policy Research, Policy Studies Organization, vol. 36(2), pages 146-167, March.
    Full references (including those not matched with items on IDEAS)

    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. Zhu, Guowei & Huang, Jing & Lu, Jinfeng & Luo, Yingyu & Zhu, Tingyu, 2024. "Gig to the left, algorithms to the right: A case study of the dark sides in the gig economy," Technological Forecasting and Social Change, Elsevier, vol. 199(C).
    2. Huang, Guan & Liang, Yuebing & Zhao, Zhan, 2023. "Understanding market competition between transportation network companies using big data," Transportation Research Part A: Policy and Practice, Elsevier, vol. 178(C).
    3. Duan, Wenqi & Li, Chen, 2023. "Be alert to dangers: Collapse and avoidance strategies of platform ecosystems," Journal of Business Research, Elsevier, vol. 162(C).
    4. Rojanakit, Patcharapar & Torres de Oliveira, Rui & Dulleck, Uwe, 2022. "The sharing economy: A critical review and research agenda," Journal of Business Research, Elsevier, vol. 139(C), pages 1317-1334.
    5. Carson Duan, 2023. "A State-of-the-Art Review of Sharing Economy Business Models and a Forecast of Future Research Directions for Sustainable Development: A Bibliometric Analysis Approach," Sustainability, MDPI, vol. 15(5), pages 1-37, March.
    6. Thornton, Heidi Coral, 2024. "Business model change and internationalization in the sharing economy," Journal of Business Research, Elsevier, vol. 170(C).
    7. Yuchen Gao & Jingrui Chen, 2019. "The Risk Reduction and Sustainable Development of Shared Transportation: The Chinese Online Car-hailing Policy Evaluation in the Digitalization Era," Sustainability, MDPI, vol. 11(9), pages 1-21, May.
    8. Markov, Iliya & Guglielmetti, Rafael & Laumanns, Marco & Fernández-Antolín, Anna & de Souza, Ravin, 2021. "Simulation-based design and analysis of on-demand mobility services," Transportation Research Part A: Policy and Practice, Elsevier, vol. 149(C), pages 170-205.
    9. Wang, Juite & Lai, Jung-Yu, 2020. "Exploring innovation diffusion of two-sided mobile payment platforms: A system dynamics approach," Technological Forecasting and Social Change, Elsevier, vol. 157(C).
    10. Kapoor, Kawaljeet & Ziaee Bigdeli, Ali & Dwivedi, Yogesh K. & Schroeder, Andreas & Beltagui, Ahmad & Baines, Tim, 2021. "A socio-technical view of platform ecosystems: Systematic review and research agenda," Journal of Business Research, Elsevier, vol. 128(C), pages 94-108.
    11. Zeng, Jing & Mahdi Tavalaei, M. & Khan, Zaheer, 2021. "Sharing economy platform firms and their resource orchestration approaches," Journal of Business Research, Elsevier, vol. 136(C), pages 451-465.
    12. Shi, Ziyi & Xu, Meng & Song, Yancun & Zhu, Zheng, 2024. "Multi-Platform dynamic game and operation of hybrid Bike-Sharing systems based on reinforcement learning," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 181(C).
    13. Vincenzo Vignieri, 2021. "Crowdsourcing as a mode of open innovation: Exploring drivers of success of a multisided platform through system dynamics modelling," Systems Research and Behavioral Science, Wiley Blackwell, vol. 38(1), pages 108-124, January.
    14. Rathore, Bhawana & Sengupta, Pooja & Biswas, Baidyanath & Kumar, Ajay, 2024. "Predicting the price of taxicabs using Artificial Intelligence: A hybrid approach based on clustering and ordinal regression models," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 185(C).
    15. 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).
    16. 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.
    17. Sen Li & Kameshwar Poolla & Pravin Varaiya, 2020. "Impact of Congestion Charge and Minimum Wage on TNCs: A Case Study for San Francisco," Papers 2003.02550, arXiv.org, revised Feb 2021.
    18. Compostella, Junia & Fulton, Lewis M. & De Kleine, Robert & Kim, Hyung Chul & Wallington, Timothy J., 2020. "Near- (2020) and long-term (2030–2035) costs of automated, electrified, and shared mobility in the United States," Transport Policy, Elsevier, vol. 85(C), pages 54-66.
    19. Izabela Jonek-Kowalska & Radosław Wolniak, 2022. "Sharing Economies’ Initiatives in Municipal Authorities’ Perspective: Research Evidence from Poland in the Context of Smart Cities’ Development," Sustainability, MDPI, vol. 14(4), pages 1-22, February.
    20. Militão, Aitan M. & Tirachini, Alejandro, 2021. "Optimal fleet size for a shared demand-responsive transport system with human-driven vs automated vehicles: A total cost minimization approach," Transportation Research Part A: Policy and Practice, Elsevier, vol. 151(C), pages 52-80.

    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:phsmap:v:632:y:2023:i:p2:s0378437123009147. 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.journals.elsevier.com/physica-a-statistical-mechpplications/ .

    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.