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Two-sided market pricing model for optimizing strategy in a taxi service platform considering price and time sensitivities of passengers

Author

Listed:
  • Wang, Chaojun
  • Li, Peng
  • Yang, Hanyu
  • Zhao, Jing

Abstract

Under the background of the emergence of online taxi service platforms, the study proposes a two-sided market pricing model focusing on passengers sensitive to both price and waiting time. By utilizing the M/M/k queueing model and a two-sided market pricing model, the research recognizes the on-demand nature of the interaction between the platform and passengers, optimizing their profits. Results show a strict monotonic relationship between passenger demand rate and factors like fleet size, the number of passengers serviced, and platform profit. However, optimal platform pricing displays non-monotonic behavior influenced by passenger utility functions and service utilization rates. An adjustment factor L refines the pricing model, indicating that the weight of passenger profit should not exceed 10.5L+1 for positive overall profit. For platforms with large taxi fleets, a slight price reduction can enhance service rates and profitability. This research provides a theoretical foundation for optimizing taxi pricing and fleet size.

Suggested Citation

  • Wang, Chaojun & Li, Peng & Yang, Hanyu & Zhao, Jing, 2025. "Two-sided market pricing model for optimizing strategy in a taxi service platform considering price and time sensitivities of passengers," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 670(C).
    • Handle: RePEc:eee:phsmap:v:670:y:2025:i:c:s0378437125002821
    DOI: 10.1016/j.physa.2025.130630
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