Coordination costs in spatial matching: Assigned versus onsite transport modes

This paper investigates the coordination costs associated with how vehicles and passengers meet in space, in any mode where the vehicle is not owned by the passenger. We introduce a novel categorisation contrasting Assigned modes (where each user has a designated vehicle) with Onsite modes (where users take the first available vehicle). Our analysis reveals that Assigned modes, exemplified by ride-hailing or on-demand public transport, generally optimise resource allocation by leveraging centralised coordination, but often incur higher coordination costs as three relevant issues arise: (i) local spatial friction, namely, the difficulty to identify the designated vehicle even when it is nearby; (ii) unreliability, as when vehicles and users are assigned a priori, any action by one agent directly impacts the others involved in the assignment, such as the other users sharing the vehicle or the vehicle itself; and (iii) the emergence of the wild goose chase, which stems from some vehicles being assigned but not yet being occupied. Conversely, in Onsite modes, exemplified by traditional taxis and public buses, passengers and vehicles meet with minimal coordination overhead, as the matching occurs spontaneously at the point of access. These findings explain why, despite the technological sophistication of Assigned systems, Onsite modes have been reported to sometimes outperform their counterparts in high-demand environments, by reducing coordination costs and enhancing system flexibility.