Equilibrium analysis for ride-pooling services in the presence of traffic congestion

Abstract

There are two major types of ride-sourcing services: non-ride-pooling services, which assign one driver to serve one passenger per ride; and ride-pooling services, which allow one driver to serve two or more passengers per ride. Many studies have analysed the equilibria of ride-sourcing markets; however, most have assumed a constant speed without considering traffic congestion, which can lead to poorly designed operating strategies. It also remains unclear how pricing and matching strategies for ride-pooling and non-ride-pooling services affect passenger demand, platform profit and social welfare, both directly and indirectly (via their effects on traffic congestion). This chapter examines these important aspects of ride-sourcing services by establishing a model of the equilibrium in ride-sourcing markets that takes into account traffic congestion externalities due to vehicles in the ride phase, idle phase and pick-up phase. The chapter also theoretically and numerically examines and compares the monopoly optimum, social optimum and second-best solutions in a ride-sourcing market with a ride-pooling service and a ride-sourcing market without a ride-pooling service.