IDEAS home Printed from https://ideas.repec.org/a/eee/transe/v198y2025ics1366554525001474.html
   My bibliography  Save this article

Optimizing on-demand ride-hailing services in two-sided coupled markets with impatient riders

Author

Listed:
  • Wang, Hui
  • Li, Yuanyuan
  • Liu, Yang
  • Hu, Xiaowei
  • Wang, Jian

Abstract

This paper examines the optimal design of dynamic pricing strategies for a coupled ride-hailing market with the coexistence of ridesharing and non-ridesharing services. Riders may switch between ridesharing and non-ridesharing alternatives to maximize individual utility, which results in demand diversion. Due to the imbalance between demand and supply, riders may become impatient towards long waiting times, leading to reneging in the coupled ride-hailing systems. We first establish dynamic meeting models for ridesharing and non-ridesharing separately to characterize temporal matching patterns. Meantime, the demand diversion generated by rider switching and reneging rate resulting from rider impatience towards waiting times are integrated into the dynamic meeting models. We derive the conditions on trip fares and commission rates to ensure the existence of the coupled ride-hailing market. We then analyze the effects of the dynamic pricing strategy on the market characteristics, including waiting times and market demand. Moreover, we formulate a Markov Decision Process (MDP) model to optimize dynamic pricing strategies and the corresponding aggregated matching between demand and supply. Finally, we develop the Proximal Policy Optimization (PPO) algorithm to solve the proposed MDP model and an iteration method that uses a Lookahead algorithm to estimate the market state. Our numerical experiments reveal that higher trip fares and commission rates should be adopted under the optimal dynamic pricing strategy compared to the fixed pricing strategy. We also demonstrate the effectiveness of dynamic pricing strategy in improving system performance and matching rate. If riders are more patient with waiting times, the platform operator can improve the trip fares for ridesharing riders to better manage demand, which helps to enhance the matching rate. Meantime, both the reneging rate and the level of demand diversion can be decreased.

Suggested Citation

  • Wang, Hui & Li, Yuanyuan & Liu, Yang & Hu, Xiaowei & Wang, Jian, 2025. "Optimizing on-demand ride-hailing services in two-sided coupled markets with impatient riders," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 198(C).
    • Handle: RePEc:eee:transe:v:198:y:2025:i:c:s1366554525001474
    DOI: 10.1016/j.tre.2025.104106
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1366554525001474
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.tre.2025.104106?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.

    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:transe:v:198:y:2025:i:c:s1366554525001474. 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.

    We have no bibliographic references for this item. You can help adding them by using 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.elsevier.com/wps/find/journaldescription.cws_home/600244/description#description .

    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.